If you’ve gone to one of those retirement planning sessions lately, you may already know that saving for life after work is not only incredibly important but also can be very complicated. These matters often become even more difficult in divorce cases, where spouses or a court have to decide how to divide savings that the parties can’t actually access yet. California’s Second District Court of Appeals recently considered such a case.
Husband and Wife separated in April 1998 after nearly 11 years of marriage. Husband had been working for the Los Angeles Fire Department for 18 years at the time and was eligible to retire in 2000. The couple entered into a marital settlement agreement in December 2000. The agreement divided the couple’s assets between the spouses and provided that all “income, earnings, employment benefits, or other property” acquired by one spouse after the separation date would be considered the spouse’s separate property. It also stated that Wife was entitled to half of Husband’s pension/retirement plan, due after he reached 30 years of service, if he decided to keep working past his earliest retirement date.
In 2010, Husband began participating in a new LAFD retirement program, the DROP program, which provides firefighters a lump sum payment upon their retirement, along with any monthly retirement allowance to which they are entitled under another plan. As a condition to the program, Husband agreed that his years of service and accrual amounts would freeze upon the date of his entry in the program. Money would be credited to his DROP account during the five-year period, and he would be able to access that money directly upon retirement.