Enforcing a Survivor Benefit Election in a Pension in Arizona
DUE TO COVID-19 AND OUR NEED TO ENSURE THE HEALTH OF OUR CLIENTS, ALL INITIAL CLIENT CONSULTATIONS WILL BE CONDUCTED BY PHONE. YOU MAY CALL US AT (480)305-8300 TO SCHEDULE A TELEPHONE CALL WITH ONE OF OUR EXPERIENCED FAMILY LAW ATTORNEYS.
A divorced spouse is obviously not a current spouse, but is she necessarily a non-spouse? This issue can be important in the context of the division of an interest in Arizona State Retirement System (“ASRS”) retirement benefits. The ASRS limits benefits to certain “non-spouse contingent annuitants.” In Di Giacinto v. Arizona State Retirement System, No. 1 CA-CV 15-0722, decided April 04, 2017, the Arizona Court of Appeals considered this issue.
Facts and Procedure
Ms. Di Giacinto and Mr. Hillis married in 1983. Through his employment, Mr. Hillis had retirement coverage under the Arizona State Retirement System. After 39 years on the job, he retired in 2003. When he retired, he had to choose how to get his retirement payments. He selected an annuity plan that provided a 100% joint and survivor annuity. That means he got lower payments during his lifetime.
However, Ms. Di Giacinto would continue getting those payments if she outlived him. Three years later, Mr. Hillis and Ms. Di Giacinto divorced. He was 69 years old at that time and she was 45 years old. The decree of dissolution ordered that a third party prepare a supplemental Domestic Relations Order dividing the retirement annuity.
The Arizona State Retirement System approved a draft Domestic Relations Order (“DRO”), and, in June 2007, the court issued the final DRO. It gave Ms. Di Giacinto 48.75% of the monthly annuity benefit and 100% survivor benefits as a contingent annuitant. ASRS agreed to comply with the last DRO, designating it a Qualified Domestic Relations Order (“QDRO”.)
In June 2014, Mr. Hillis asked for a review of the final DRO’s distribution allocation. He claimed that the ASRS could consider it under its authority to correct errors. ASRS determined that the last DRO was “not acceptable.” It found that the DRO improperly preserved Ms. Di Giacinto’s survivor benefits, which the ASRS now said violated Arizona Administrative Code R2-8-126(H).
The ASRS Board held a hearing on the matter. The board decided that when the divorce decree was entered, Ms. Di Giacinto was automatically removed as the contingent annuitant. Ms. Di Giacinto appealed to the superior court, which affirmed the decision. She appealed to the Court of Appeals.
Question on Appeal: Definition of “Non-Spouse”
Arizona law prevents a Domestic Relations Order from requiring that the ARSR Board give someone survivor benefits disallowed by statute. The question, the Court said, was whether Ms. Di Giacinto was eligible for a 100% joint-and-survivor option.
Under ASRS regulations, the payment options to a “non-spousal contingent annuitant” are limited. A “non-spouse” more than 10 years younger than the spouse cannot participate in a 100% joint-and-survivor option.
The question the Court addressed on appeal was the definition of “non-spouse.” Does the term include former spouses in the context of this rule?
Definition of a “Non-Spousal Contingent Annuitant”
The law limits the distributions that ASRS may make to “non-spousal” beneficiaries. But the term is not defined in the regulation or the statute. The Court of Appeals considered the rest of the statute to interpret the phrase. The Court said that the term “non-spouse” considered alone might have been construed to mean a former spouse. But the Court reviewed the rest of the statute [Title 38, Chapter 5, Article 2]. It said that the review made clear that the term “non-spouse” does not include a former spouse.
The statute states that all distribution provisions must be interpreted with the relevant provisions of the Internal Revenue Code. Therefore, limitations on non-spousal contingent annuitants must also be interpreted consistently with the Internal Revenue Code.
Section 401(a)(9) of the IRC sets general rules governing how, when, and to whom benefits may be distributed. This includes spousal survivor benefits. The regulations under that section provide:
A former spouse to whom all or a portion of the employee’s benefit is payable pursuant to a QDRO will be treated as a spouse (including a surviving spouse) of the employee for purposes of section 401(a)(9), regardless of whether the QDRO specifically provides that the former spouse is treated as the spouse․
Therefore, this regulation required ASRS to treat Ms. Di Giacinto as a spouse if the decree or final DRO is a QDRO. Therefore, the Arizona Court of Appeals ruled that the ASRS was wrong in equating “non-spouse” with a former spouse.
The Final DRO was a QDRO for purposes of the federal former spouse exception is a Domestic Relations Order that “recognizes the existence of an alternate payee’s right to receive a portion of the benefits payable concerning a participant under a plan.”
The term “alternate payee” refers to a spouse or former spouse “who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under a plan concerning such participant.”
A valid DRO must specify:
(1) the names and last known mailing addresses of the named participant and alternate payee
(2) the amount or percentage of the benefits to be paid to the alternate payee
(3) “the number of payments or period to which the order applies”
(4) “each plan to which [the DRO] applies.” [26 U.S.C. § 414(p)(2)].
The Court noted that the dissolution decree itself is not a QDRO. It does not list the addresses or last known addresses of Ms. Di Giacinto or Mr. Hillis. But the final DRO meets all of the requirements. By using “any” and “former spouse,” the statute unambiguously allows a QDRO to be issued after a marriage is dissolved. Therefore, the Court held that a QDRO doesn’t have to be entered at the same time as the decree of dissolution. It only needs to include all the elements listed in the code.
Arizona Statutes Did Not Terminate Ms. Di Giacinto’s Benefits
The ASRS also argues that A.R.S. § 38-773(D) automatically terminated Ms. Di Giacinto’s rights to survivor benefits when the couple divorced. However, this ignores the first twelve words of that provision:
“Except as provided by the express terms of a domestic relations order, the divorce or annulment of a member’s marriage revokes any revocable disposition or appointment of benefits made by a divorced member to that member’s former spouse․”
Given that both the order and the DRO expressly provided that the benefits not be revoked, the dissolution did not terminate Ms. Di Giacinto’s rights to survivor benefits.
The Arizona Court of Appeals held that ASRS has no statutory authority to limit a former spouse’s survivor benefits if a qualified domestic relations order preserves them. It reversed and remanded for entry of judgment in favor of Ms. Di Giacinto.
If you have questions about enforcing survivor election in a pension in an Arizona divorce case, you should seriously consider contacting the attorneys at Hildebrand Law, PC. Our Arizona divorce and family law attorneys have over 100 years of combined experience successfully representing clients in divorce and family law cases.
Our family law firm has earned numerous awards such as US News and World Reports Best Arizona Family Law Firm, US News and World Report Best Divorce Attorneys, “Best of the Valley” by Arizona Foothills readers, and “Best Arizona Divorce Law Firms” by North Scottsdale Magazine.
Call us today at (480)305-8300 or reach out to us through our appointment scheduling form to schedule your personalized consultation and turn your Arizona divorce or family law case around today.
Arizona Family Law Attorneys in Scottsdale and Tucson Arizona
More Articles About Divorce in Arizona
- The advantage of Filing Divorce First in Arizona
- Are Prenuptial Agreements Enforceable in Arizona
- Arizona Divorce
- Arizona Divorce Attorney Reviews
- Arizona Divorce Child Custody
- Arizona Divorce Debt
- Arizona Divorce Forms
- Arizona Divorce Laws
- Arizona Divorce Laws Alimony
- Arizona Divorce Laws and Statutes
- Arizona Divorce Laws on Adultery
- Arizona Divorce Papers
- Arizona Divorce Practice
- Arizona Divorce Process
- Arizona Divorce Records Search
- Arizona Marriage Laws
- Asset and Property Search in an Arizona Divorce
- Arizona Divorce When You Can’t Find Your Spouse
- Change to Maiden Name After Divorce in Arizona
- Changing Orders in an Arizona Divorce Decree
- Children and Divorce in Arizona
- College Expenses After Divorce in Arizona
- Complex Divorce Cases in Arizona
- Conciliation Court Services in Arizona
- Consent Required for Marriage of Minors in Arizona
- Considering the Children during a Divorce in Arizona
- Convert to a Covenant Marriage in Arizona
- Coping With Divorce in Arizona
- Court Services to Save a Marriage in Arizona
- Custody of the Family Pet in a Divorce in Arizona
- Dissolution of Marriage in Arizona
- Divorce After Legal Separation in Arizona
- Divorce and Children in Arizona
- Divorce Arizona
- Divorce Case is on the Inactive Calendar in Arizona
- Divorce Court Jurisdiction in Arizona
- Divorce in Arizona Without Children
- Divorce Procedures in Arizona
- Divorce Records in Arizona
- Divorce Statistics in Arizona
- Divorce Support Groups in Arizona
- Domestic Violence and Divorce in Arizona
- Effect of Adultery on an Arizona Divorce
- Effects of Divorce on Children in Arizona
- Enforceable Arizona Prenuptial Agreements
- Failure to Include an Issue in an Arizona Divorce
- Filing for Divorce in Arizona
- Filing for Divorce to Receive Alimony in Arizona
- Guide to Divorce for Men in Arizona
- High Asset Divorce in Arizona
- High Conflict Divorce in Arizona
- High Net Worth Divorce Arizona
- How is a Divorce Finalized in Arizona
- How Long Does a Contested Divorce Take in Arizona
- How Long Does it Take to Get a Divorce in Arizona
- How Long Does it Take to Get Divorced in Arizona
- How Long Does Uncontested Divorce Take in Arizona
- How Long To Be Separated Before Divorce in Arizona
- How long to get Temporary Orders in Arizona
- How Much Does it Cost to Get a Divorce in Arizona
- How to Appeal a Divorce Decree in Arizona
- How To Find Good Divorce Attorney in Arizona
- How to Start a Divorce in Arizona
- Learn About Uncontested Divorce in Arizona
- Legally Separated File Divorce in Arizona
- Marital Settlement Agreement in Arizona
- The merger of the Settlement Agreement in Arizona
- Military Divorce Laws in Arizona
- Misled Into Signing Divorce Settlement in Arizona
- Modifying a Divorce Decree in Arizona
- No Contest Divorce in Arizona
- No-Fault Divorce in Arizona
- Order to Pay Spouses Attorney Fees in Arizona
- Parenting Class During a Divorce in Arizona
- Petition for Dissolution of Marriage in Arizona
- Protect Children in a Divorce in Arizona
- Quick Divorce in Arizona
- Reasons for Divorce in Arizona
- Reasons to File for Divorce in Arizona
- Represent Yourself in Arizona Divorce Case
- Same-Sex Divorce in Arizona
- Sealing Court Records in an Arizona Divorce
- Sell Home During Divorce in Arizona
- Selling Property During a Divorce in Arizona
- Served With Divorce Papers in Arizona
- Serving Divorce Papers by Publication in Arizona
- Should I Keep the House in a Divorce in Arizona
- Social Media Evidence in Divorce in Arizona
- Stop an Arizona Divorce
- Stop an Arizona Divorce if You Change Your Mind
- What Happens at a Resolution Management Conference in Arizona
- What Happens If the Divorce Case Goes to Trial in Arizona
- What Happens Temporary Orders Hearing in Arizona
- What is a Covenant Marriage in Arizona
- What is a Default Divorce in Arizona
- What is a Family Law Master in an Arizona Divorce Case
- What is a Preliminary Injunction in an Arizona Divorce
- What is a Temporary Orders Hearing in Arizona
- What is the Divorce Process in Arizona
- What Reasons Do I Need to Obtain a Divorce in a Covenant Marriage in Arizona
- What to do When Served with Divorce Papers in Arizona
- When Can I File For Divorce in Arizona
Chris Hildebrand wrote the information on this page about pensions and survivor benefit elections in Arizona to ensure everyone has access to information about family law in Arizona. Chris is a divorce and family law attorney at Hildebrand Law, PC. He has over 24 years of Arizona family law experience and has received multiple awards, including US News and World Report “Top Arizona Divorce Attorneys”, Phoenix Magazine “Top Divorce Law Firms”, and Arizona Foothills Magazine “Best of the Valley” award. He believes the policies and procedures he uses to get his clients through a divorce should all be guided by the principles of honesty, integrity, and, quite frankly, actually caring about what his clients are going through in a divorce or family law case. In short, his practice is defined by the success of his clients. He also manages all of the other attorneys at his firm to make sure the outcomes in their clients’ cases are successful as well.
As Seen on CBS News, ABC News, NBC News, and Fox News