A Handbook for

Attorneys on

Court-ordered

Retirement, Health

Benefits and Life

Insurance Under the

 

$ Civil Service Retirement Benefits

$ Federal Employees Retirement Benefits

$ Federal Employees Health Benefits

$ Federal Employees Group Life Insurance Program

 

 

 

 

United States

Office of Retirement and Insurance Service

Personnel RI 83-116

Management Revised July 1997

 

A Handbook for

Attorneys on

Court-ordered

Retirement, Health

Benefits and Life

Insurance Under the

 

$ Civil Service Retirement Benefits

$ Federal Employees Retirement Benefits

$ Federal Employees Health Benefits

$ Federal Employees Group Life Insurance Program

 

 

Table of Contents

 

Introduction.................................................................................................................. 1

 

Retirement.................................................................................................................... 5

 

Preparing a Court Order............................................................................................ 6

Exemption from ERISA........................................................................................ 6

Benefits payable................................................................................................... 6

 

Information Available From the Federal Government................................................... 7

Information available on current employees............................................................ 7

Information on retirees and former employees........................................................ 8

 

Information Not Available From the Government........................................................ 8

 

CSRS Statutory Provisions....................................................................................... 11

 

' 8346. Exemption from legal process; recovery of payments...................................... 11

' 8345. Payment of benefits; commencement, termination, and waiver of annuity......... 12

' 8341. Survivor annuities........................................................................................ 13

' 8342. Lump-sum benefits; designation of beneficiary; order of precedence................. 16

 

FERS Statutory Provisions....................................................................................... 17

 

' 8470. Exemption from legal process; recovery of payments...................................... 17

' 8467. Court orders................................................................................................ 17

' 8445. Rights of a former spouse............................................................................. 18

' 8401. Definitions................................................................................................... 21

' 8424. Lump-sum Benefits; designation of beneficiary; order of precedence................ 21

 

Retirement Regulations...................................................................................................... 23

 

How the Regulations Are Organized........................................................................... 23

 

Table of Contents

 

Subpart A‑‑Court Orders Generally....................................................................... 30

 

ORGANIZATION AND STRUCTURE OF REGULATIONS ON COURT ORDERS.......... 30

' 838.101 Purpose and scope......................................................................... 30

' 838.102 Regulatory structure....................................................................... 31

' 838.103 Definitions..................................................................................... 32

Civil Service Retirement System................................................................. 32

Court order............................................................................................... 32

Court order acceptable for processing.......................................................... 32

Employee.................................................................................................. 32

Employee annuity...................................................................................... 32

ERISA...................................................................................................... 33

Federal Employees Retirement System or FERS........................................... 33

Former spouse........................................................................................... 33

Former spouse survivor annuity.................................................................. 33

Gross annuity............................................................................................ 33

Member.................................................................................................... 33

Net annuity............................................................................................... 33

Reduction to provide survivor benefits......................................................... 34

Refund of employee contributions............................................................... 34

Separated employee................................................................................... 34

 

STATUTORY LIMIT ON COURT'S AUTHORITY............................................ 34

' 838.111 Exemption from legal process except as authorized by Federal law..... 34

 

DIVISION OF RESPONSIBILITIES................................................................... 35

' 838.121 OPM's responsibilities.................................................................... 35

' 838.122 State courts' responsibilities............................................................. 35

' 838.123 Claimants' responsibilities............................................................... 35

' 838.124 Employees' and retirees' responsibilities........................................... 36

 

PROCEDURES APPLICABLE TO ALL COURT ORDERS................................. 36

' 838.131 Computation of time...................................................................... 36

' 838.132 Payment schedules......................................................................... 36

' 838.133 Minimum awards........................................................................... 37

' 838.134 Receipt of multiple court orders....................................................... 37

' 838.135 Settlements.................................................................................... 38

' 838.136 Administrative appeal rights............................................................ 38

 

ADDRESS FOR FILING COURT ORDERS WITH OPM.................................... 39

Appendix A to Subpart A of Part 838‑‑Addresses for Serving Court Orders Affecting CSRS or FERS Benefits............................................................................. 39

 

Subpart B‑‑Procedures for Processing Court Orders Affecting Employee Annuities 40

 

REGULATORY STRUCTURE........................................................................... 40

' 838.201 Purpose and scope......................................................................... 40

 

AVAILABILITY OF FUNDS.............................................................................. 40

' 838.211 Amounts subject to court orders...................................................... 40

 

APPLICATION AND PROCESSING PROCEDURES......................................... 41

' 838.221 Application requirements................................................................ 41

' 838.222 OPM action on receipt of a court order acceptable for processing....... 42

' 838.223 OPM action on receipt of a court order not acceptable for processing. 44

' 838.224 Contesting the validity of court orders.............................................. 45

' 838.225 Processing amended court orders.................................................... 45

 

PAYMENT PROCEDURES............................................................................... 46

' 838.231 Commencing date of payments....................................................... 46

' 838.232 Suspension of payments................................................................. 46

' 838.233 Termination of payments................................................................ 46

' 838.234 Collection of arrearages.................................................................. 47

' 838.235 Payment of lump‑sum awards......................................................... 47

' 838.236 Court orders barring payment of annuities........................................ 47

' 838.237 Death of the former spouse............................................................. 48

 

PROCEDURES FOR COMPUTING THE AMOUNT PAYABLE......................... 48

' 838.241 Cost‑of‑living adjustments.............................................................. 48

' 838.242 Computing lengths of service.......................................................... 49

' 838.243 Minimum amount of awards........................................................... 49

 

Subpart C‑‑ Requirements for Court Orders Affecting Employee Annuities........... 50

 

' 838.301 Purpose and scope......................................................................... 50

' 838.302 Language not acceptable for processing............................................ 50

Qualifying Domestic Relations Orders.......................................................... 50

Benefits for the lifetime of the former spouse............................................... 51

' 838.303 Expressly dividing employee annuity................................................ 51

' 838.304 Providing for payment to the former spouse..................................... 51

' 838.305 OPM computation of formulas........................................................ 52

' 838.306 Specifying type of annuity for application of formula, percentage or fraction..................................................................................................... 54

 

Subpart D‑‑Procedures for Processing Court Orders Affecting Refunds of Employee Contributions.................................................................................................... 55

 

REGULATORY STRUCTURE........................................................................... 55

' 838.401 Purpose and scope......................................................................... 55

 

AVAILABILITY OF FUNDS.............................................................................. 56

' 838.411 Amounts subject to court orders...................................................... 56

 

APPLICATION AND PROCESSING PROCEDURES......................................... 56

' 838.421 Application requirements................................................................ 56

' 838.422 Timeliness of application................................................................ 57

' 838.423 OPM action on receipt of a court order acceptable for processing....... 57

' 838.424 OPM action on receipt of a court order not acceptable for processing. 59

' 838.425 Contesting the validity of court orders.............................................. 59

 

PAYMENT PROCEDURES............................................................................... 60

' 838.431 Correcting failures to provide required spousal notification................. 60

' 838.432 Court orders barring payment of refunds.......................................... 60

 

PROCEDURES FOR COMPUTING THE AMOUNT PAYABLE......................... 61

' 838.441 Computing lengths of service.......................................................... 61

 

Subpart E‑‑ Requirements for Court Orders Affecting Refunds of Employee Contributions.................................................................................................... 62

 

' 838.501 Purpose and scope......................................................................... 62

' 838.502 Expressly dividing a refund of employee contributions....................... 62

' 838.503 Providing for payment to the former spouse..................................... 63

' 838.504 OPM computation of formulas........................................................ 63

' 838.505 Barring payment of refunds............................................................ 64

 

Subpart F‑‑Terminology Used in Court Orders Affecting Employee Annuities or Refunds of Employee Contributions.................................................................. 65

 

REGULATORY STRUCTURE........................................................................... 65

' 838.601 Purpose and scope......................................................................... 65

 

IDENTIFICATION OF BENEFITS..................................................................... 66

' 838.611 Identifying the retirement system..................................................... 66

' 838.612 Distinguishing between annuities and contributions............................ 66

 

COMPUTATION OF BENEFITS....................................................................... 67

' 838.621 Prorata share................................................................................. 67

' 838.622 Cost‑of‑living and salary adjustments............................................... 68

' 838.623 Computing lengths of service.......................................................... 69

' 838.624 Distinguishing between formulas and fixed amounts.......................... 71

' 838.625 Types of annuity............................................................................ 71

 

MODEL PARAGRAPHS.................................................................................. 72

Appendix A to Subpart F of Part 838‑‑Recommended Language for Court Orders Dividing Employee Annuities....................................................... 72

 

TABLE OF CONTENTS............................................................................... 73

 

000 Series‑‑Special Technical Provisions.................................................. 74

&001 Language required in Qualified Domestic Relations Orders................. 74

 

100 Series‑‑Identification of the benefits and instructions that OPM pay the former spouse........................................................................... 74

&101 Identifying retirement benefits and directing OPM to pay the former spouse............................................................................................. 74

 

&111 Protecting a former spouse entitled to military retired pay................ 75

 

200 Series‑‑Computing the amount of the former spouse's benefit........... 75

&201 Award of a fixed monthly amount.................................................... 75

&202 Award of a percentage................................................................. 76

&203 Award of a fraction...................................................................... 76

&204 Award of a prorata share.............................................................. 76

&211 Award based on a stated formula.................................................. 77

&231 Awarding COLA's on fixed monthly amounts.................................... 78

&232 Excluding COLA's on awards other than fixed monthly amounts...... 78

 

300 Series‑‑Type of annuity...................................................................... 79

&301 Awards based on benefits actually paid.......................................... 79

&311 Awards of earned annuity in cases where the actual annuity is based on disability.......................................................................................... 79

 

400 Series‑‑Refunds of employee contributions........................................ 80

&401 Barring payment of a refund of employee contributions................... 81

&402 Dividing a refund of employee contributions...................................... 81

 

500 Series‑‑Death of the former spouse.................................................... 81

&501 Full annuity restored to the retiree................................................. 81

&502 Former spouse share paid to children............................................. 81

&503 Former spouse share paid to the court........................................... 82

 

Subpart G‑‑Procedures for Processing Court Orders Awarding Former Spouse Survivor Annuities............................................................................................ 83

 

REGULATORY STRUCTURE........................................................................... 83

' 838.701 Purpose and scope......................................................................... 83

 

LIMITATIONS ON SURVIVOR ANNUITIES..................................................... 84

' 838.711 Maximum former spouse survivor annuity........................................ 84

 

APPLICATION AND PROCESSING PROCEDURES......................................... 84

' 838.721 Application requirements................................................................ 84

' 838.722 OPM action on receipt of a court order acceptable for processing. 85

' 838.723 OPM action on receipt of a court order not acceptable for processing. 88

' 838.724 Contesting the validity of court orders.............................................. 88

' 838.725 Effect on employee and retiree election rights................................... 89

 

PAYMENT PROCEDURES............................................................................... 89

' 838.731 Commencing date of payments....................................................... 89

' 838.732 Termination of entitlement.............................................................. 89

' 838.733 Rights of current and other former spouses after termination of a former spouse's entitlement................................................................................... 90

' 838.734 Payment of lump‑sum awards by survivor annuity............................ 91

' 838.735 Cost‑of‑living adjustments.............................................................. 91

 

Subpart H‑‑ Requirements for Court Orders Awarding Former Spouse Survivor Annuities........................................................................................................... 93

' 838.801 Purpose and scope......................................................................... 93

' 838.802 CSRS limitations............................................................................ 93

' 838.803 Language not acceptable for processing............................................ 93

Qualifying Domestic Relations Orders.......................................................... 93

Employee annuity cannot continue after the death of the retiree..................... 94

' 838.804 Court orders must expressly award a former spouse survivor annuity or expressly direct an employee or retiree to elect to provide a former spouse survivor annuity......................................................................................... 94

' 838.805 OPM computation of formulas in computing the designated base....... 95

' 838.806 Amended court orders.................................................................... 95

' 838.807 Cost must be paid by annuity reduction............................................ 97

 

Subpart I‑‑Terminology Used in Court Orders Awarding Former Spouse Survivor Annuities........................................................................................................... 99

 

REGULATORY STRUCTURE........................................................................... 99

' 838.901 Purpose and scope......................................................................... 99

IDENTIFICATION OF BENEFITS.................................................................... 100

' 838.911 Identifying the retirement system.................................................... 100

' 838.912 Specifying an award of a former spouse survivor annuity.................. 101

 

COMPUTATION OF BENEFIT......................................................................... 102

' 838.921 Determining the amount of a former spouse survivor annuity............ 102

' 838.922 Prorata share defined..................................................................... 103

' 838.923 Cost‑of‑living adjustment before the death of a retiree...................... 104

 

MISCELLANEOUS PROVISIONS..................................................................... 104

' 838.931 Court orders that provide temporary awards of former spouse survivor annuities................................................................................................... 104

' 838.932 Court orders that permit the former spouse to elect to receive a former spouse survivor annuity............................................................................. 105

 

MODEL PARAGRAPHS................................................................................. 107

Appendix A to Subpart I of Part 838‑‑ Recommended Language for Court Orders Awarding Former Spouse Survivor Annuities.............................. 107

 

TABLE OF CONTENTS............................................................................... 109

 

700 Series‑‑Computing the amount of the former spouse's benefit.......... 110

&701 Award of the maximum survivor annuity....................................... 110

&702 Award that continues the pre‑divorce survivor annuity benefits.......... 111

&703 Award of a prorata share............................................................. 111

&704 Award of a fixed monthly amount................................................ 111

&711 Award of a percentage or fraction of the employee annuity............. 112

&712 Award based on a stated formula as a share of employee annuity.... 112

&721 Award of a percentage or fraction of the maximum survivor annuity.113

&722 Award based on a stated formula as a share of maximum survivor annuity........................................................................................... 113

&751 Changing amount of former spouse survivor annuity based on remarriage before retirement............................................................................. 114

&752 Changing amount of former spouse survivor annuity based on remarriage after retirement............................................................................... 114

 

800 Series‑‑Paying the cost of a former spouse survivor annuity............. 115

&801 Costs to be paid from the employee annuity.................................. 115

&802 Costs to be paid from former spouse's share of the employee

annuity..................................................................................................... 115

 

900 Series‑‑Refunds of employee contributions....................................... 116

&901 Barring payment of a refund of employee contributions...................... 116

&902 Dividing a refund of employee contributions................................... 116

Former Spouse Health Benefits Coverage............................................................. 119

 

FEHB Statutory Provisions...................................................................................... 121

' 8901. Definitions.................................................................................................. 121

' 8905. Election of Coverage................................................................................... 123

 

Health Benefits Regulations..................................................................................... 125

 

Subpart H‑‑Benefits for Former Spouses............................................................... 125

 

' 890.801 Introduction............................................................................................... 125

' 890.802 Definition.......................................................................................... 125

' 890.803 Who may enroll................................................................................. 125

' 890.804 Coverage............................................................................................ 126

Type of enrollment........................................................................................ 126

Proof of dependency...................................................................................... 126

Exclusions from coverage............................................................................... 127

Child incapable of self-support........................................................................ 127

Meaning of unmarried child............................................................................ 127

' 890.805 Application time limitations................................................................. 127

' 890.806 Effective dates of coverage................................................................. 128

Generally...................................................................................................... 128

Change required because of insufficient annuity................................................ 129

' 890.807 Termination of enrollment.................................................................. 129

Coverage of members of the family................................................................. 130

Cancellation.................................................................................................. 130

' 890.808 Employing Office Responsibilities........................................................ 131

Application for benefits.................................................................................. 131

Administration of the enrollment process.......................................................... 131

Qualifying court order.................................................................................... 132

Premium payments........................................................................................ 132

Withholding from annuity............................................................................... 133

 

Life Insurance............................................................................................................. 135

 

Assignment of Life Insurance Coverage........................................................................ 137

 

FEGLI Statutory Provisions..................................................................................... 141

'8706. Termination of Insurance; Assignment of Ownership ..................................... 141

 

 

Court Orders Affecting

 

Civil Service Retirement Benefits

 

Federal Employees Retirement Benefits

 

Federal Employees Health Benefits

 

and

 

Federal Employees Group Life Insurance Benefits

 

Statutes and Regulations

 

 

 

Introduction

 

 

This publication contains the Federal statutes and regulations applicable to court orders affecting retirement benefits under the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS). The United States Office of Personnel Management (OPM) administers both of these retirement systems. CSRS covers most employees first hired before 1984. FERS generally covers employees first hired by the Federal Government after 1983, plus other Federal employees who elected to transfer from CSRS to FERS. The publication also includes the statutes and regulations describing the conditions under which a former spouse's Federal Employees Health Benefits (FEHB) coverage may be continued after a divorce, as well as the statute under which an employee or former employee may make an irrevocable assignment of his or her Federal Employees' Group Life Insurance (FEGLI) coverage.

 

This publication is for attorneys and others who are involved in the preparation of divorce and separation agreements that involve a current or former employee, including an annuitant, of the Federal Government who is or was covered by the CSRS or FERS.

 

The pocket at the end of this publication contains a 3.5 inch diskette containing the model language that may be used in drafting court orders. The diskette contains three files with the model language in three common word processor formats. COMODEL.WP is in WordPerfect format. COMODEL.WRD is in Word format. COMODEL.GEN is in a generic word processor format.

 

Note: Certain individuals who may be covered by other retirement systems (such as the Foreign Service Retirement System) still participate in the FEHB and FEGLI programs. The rules concerning continuation of FEHB coverage for former spouses after divorce and assignment of FEGLI coverage to a former spouse also apply to this group of individuals.

RETIREMENT

Blank Page

Retirement

 

OPM published revised regulations on court orders affecting retirement benefits in the Federal Register on July 29, 1992. These regulations synthesize our experience in processing court orders since 1978. They are designed to make it easier for parties in a divorce to ensure that court orders will be acceptable to OPM for processing, and that OPM will divide CSRS or FERS benefits, or provide a survivor benefit, in accordance with their wishes.

 

The new regulations, which are reproduced in this document, are very detailed as to what constitutes a court order that is acceptable for processing, and as to the exact meaning of court order terminology. The definitions in these regulations are designed to give the most commonly-used meaning to words most often encountered in court orders. This will allow OPM to accept as many court orders as possible rather than rejecting orders, which would require the parties to return to State court. To further facilitate preparation of acceptable orders, appendices to the regulations contain model paragraphs that attorneys can use to ensure that, in drafting orders, the language they select will both produce the intended result and meet OPM's processing requirements. While the regulations themselves apply to court orders that OPM receives on or after January 1, 1993, a court order prepared using them also will be acceptable under the regulations that apply to orders that OPM receives before January 1, 1993. In addition, OPM strongly encourages use of the model language to ensure that a court order will be acceptable for processing by OPM.

OPM's role is ministerial, rather than that of a mediator in marital property disputes. This latter role belongs to the State courts. If a court order is so flawed that it is not sufficiently clear to satisfy our requirements, the appropriate action is for the parties to return to the State court to correct the problem. Likewise, if a party contends that the court intended its order to have a different meaning than the clear meaning it has under these regulations, the proper forum for the individual's complaint is the State court. OPM will require employees and former spouses to settle disputes in the State courts where they belong, not in Federal proceedings. The courts issuing the orders are in the best position to determine the meaning of their own orders.

 

Please note that this publication does not contain information on garnishment of pay or annuity of an employee or annuitant for alimony or child support. OPM's regulations governing garnishments may be found in Part 581 of title 5 of the Code of Federal Regulations.

 

Preparing a Court Order

 

Exemption from ERISA

 

A substantial number of State court orders are drafted under the mistaken belief that the Employee Retirement Income Security Act (ERISA) (29 U.S.C. 1001 et seq.) applies to CSRS or FERS benefits. Sections 1003(b)(1) and 1051 of title 29, United States Code, exempt CSRS and FERS from ERISA, because CSRS and FERS are "governmental plans" as defined in section 1001(23) of title 29, United States Code.

 

ERISA created the term "qualified domestic relations order" (QDRO) to describe a court order that summarizes the division of retirement benefits under ERISA plans. QDRO's are not acceptable to affect CSRS or FERS benefits. OPM has seen from experience that attorneys prepare these orders on the assumption that they can provide any benefits available under ERISA to CSRS and FERS. (For example, the most important difference between ERISA plans and CSRS and FERS is that under ERISA the former spouse's share of the benefit can begin when the employee reaches the minimum retirement age, even if the employee is still working. However, this benefit is not available under CSRS or FERS. The availability of this early benefit, or lack of availability, can seriously alter negotiations over a settlement agreement.)

 

Since CSRS and FERS are exempt from ERISA, some provisions that ERISA plans must honor do not apply to CSRS and FERS. For OPM to be able to process court orders in the way intended by the parties, OPM and the court must be speaking the same language. To assure that the court has used our terminology, rather than ERISA's terminology, an order labelled as a QDRO is not acceptable. However, this prohibition against labelling the order as a QDRO does not apply if court orders also expressly state that they are written in conformity with OPM's regulations. This exception will guarantee that the purpose of the ban‑‑that the court understands that we are exempt from ERISA and that the court is using the terminology as provided in the regulations‑‑is satisfied by requiring that any QDRO mention the regulations. Model paragraph &001 in appendix A to subpart F of the regulations provides the required language. (See page 74.)

 

 

 

Benefits payable

 

A court order may affect any of three types of retirement benefits paid by OPM. The regulations treat each of the three‑‑employee annuities, refunds of employee contributions, and survivor annuities‑‑independently. In preparing a court order, attorneys should keep in mind that we consider each of the three types of awards as separate and independent of the other two, and should exercise great care in each type of benefit they intend to affect. Our requirement that the award of each type of benefit be independent does not mean that the court award of one type of benefit cannot affect another. For example, awarding a former spouse survivor annuity requires a reduction in the employee annuity. If the former spouse has also been awarded a portion of the gross or net employee annuity, the former spouse's portion of the employee annuity will be affected.

 

A complete court order requires three separate provisions‑‑one addressing each type of benefit that the court can affect. However, frequently, courts intend to award only a portion of the employee annuity or a survivor annuity, rather than a complete retirement package. A court that intends only to divide an employee annuity needs to consider only subparts A, B, C, and F of these regulations. Similarly, if the court intends to award only a survivor annuity, only subparts A, G, H, and I of these regulations apply. To provide a former spouse with a share of an employee annuity or refund of employee contributions and a survivor annuity, the order must include the language required by the appropriate subparts and, preferably, the model language appendices. Note that if the employee receives a refund of retirement contributions, the former spouse's future annuity entitlement will be voided. The court may wish to prevent payment of the refund of retirement contributions or award the former spouse a portion of the refund. Subparts A, D, E, and F apply to refunds of retirement contributions. Paragraph 401 in appendix A to subpart F contains language that may be used to prevent a refund of retirement contributions. (See pages 80-81.) The complete regulatory structure is addressed in section 838.102 of regulations. (See page 31.)

 

State court orders cannot affect several types of benefits payable under CSRS and FERS. OPM must pay any accrued annuity that is not paid before a retiree's death and any unexpended balance of an employee's retirement contributions that are paid as a death benefit in accordance with the order of precedence established by Federal law. Similarly, eligibility for children's survivor benefits is governed entirely by Federal law and cannot be affected by State court orders.

 

Information Available From the Federal Government

 

Information available on current employees

 

The employing agency is the proper source for employment and pay information about a current employee's service with that agency. OPM does not receive records until after an employee leaves an agency's employment. With regard to requests for an individual's employment and pay records, agency personnel must comply with Privacy Act rules and applicable regulations before disclosing the information.

 

However, if a current employee has previous employment with a different Federal agency (for example, someone who currently is a civilian employee with the Department of the Army, but who previously worked for the U.S. Postal Service), information about the employee's contributions to the Retirement Fund during the prior service is only available from OPM.

 

Commonly requested information, which agencies can provide in response to a subpoena signed by a judge or a release signed by the employee, includes a statement of retirement system coverage (CSRS or FERS), the amount of money withheld by that agency to the employee's credit in the retirement fund, and an annuity estimate using the employee's service history to date. The exact requirements for obtaining information vary among agencies. Information about the agency's procedures for obtaining such information should be obtained from the agency involved. If an agency provides an annuity estimate--as agencies generally do for employees at or near retirement--that benefit calculation is only an estimate, and is not binding on the Government. Agencies should not provide estimates that would require speculation about future promotions, program changes, or any other non-factual information and should avoid giving annu