Petitioner's Brief on the Merits - Supreme Court of Texas

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otherwise provided by the plan. 26 U.S.C.A. § 414(p)(1)(A); 29 U.S.C.A. § 1056(d)(3). Plan administrators do not undertake a substantive review of the QDROs and are, in fact, required to approve QDROs that meet these simple requirements and do not violate the parameters of the pension plan itself. 29 U.S.C.A. § 1056(d)(3). The Texas Legislature has in turn amended the Family Code to provide for QDRO proceedings after divorce. Act of May 27, 1995, 74 th Leg., R.S., ch. 1026, 1995 Tex. Gen. Laws 5106 (codified at TEX. FAM. CODE §§ 9.101-.105). Thus, it is increasingly important that the courts develop an accurate understanding of these pension benefits and how to divide them appropriately within the confines of constitutionally guaranteed marital property rights. B. Defined contribution and defined benefit plans are fundamentally different. Employee retirement plans fall into two main categories: defined contribution and defined benefit plans. 8 As this case illustrates, courts and practitioners frequently fail to appreciate the differences between the two plans when approving, drafting, and interpreting divorce decrees and QDROs. The differences are critical because the method of proper apportionment and valuation of a given plan differs depending on the type of plan and facts of the case. 1. Defined contribution plans Defined contribution plans, sometimes known as “individual account” plans, are composed of contributions from the employer or employee and have no pre-set formula for determining benefits. Instead, benefits are determined by the amount of contributions plus 6
earnings less applicable plan expenses, if any. 9 Defined contribution plans are relatively simple to divide. In most cases, the value of, or the “accrued benefit” in the plan is the total account balance on a given date. 10 Defined contribution plans thus may be apportioned by a simple formula, using a divorce-date accrued benefit, and subtracting the marriage-date accrued benefit, if any. 11 However, if an individual participated in the plan prior to the date of the marriage or if the benefits are not divided until after divorce, care must be taken to prorate the total benefit accordingly by segregating out any increases or decreases of separate property in the plan. See part III.B, infra. Pension administrators and litigants naturally prefer division upon divorce to avoid the problems inherent in future contingencies and disputes, and the plans generally allow doing so. 12 When partition cannot take place before retirement, any divorce decree or 8 Steven R. Brown, An Interdisciplinary Analysis of the Division of Pension Benefits in Divorce and Post-Judgment Partition Actions: Cures for the Inequites in Berry v. Berry, 39 BAYLOR L. REV. 1131, 1137 (1987). 9 Brown, at 1137-39; see also 26 U.S.C.A. § 414(i). 10 GARY A. SHULMAN & DAVID I. KELLEY, DIVIDING PENSIONS IN DIVORCE § 1.3 (1999) (hereinafter DIVIDING PENSIONS); VICTOR B. MEYEN & MARK W. DUNDEE, QUALIFIED DOMESTIC RELATIONS ORDER ANSWER BOOK Q1:39 (1998) (hereinafter QDRO ANSWER BOOK) (excerpts from both treatises attached at Tabs H & I of the Pet. for Review). 11 See Baw v. Baw, 949 S.W.2d 764, 766, 767-68 (Tex. App. – Dallas 1997, no writ) (approving of apportionment of a defined contribution plan by subtracting the value of the plan at marriage from the value at divorce); Hatteberg v. Hatteberg, 933 S.W.2d 524, 531 (Tex. App. – Houston [1st Dist.] 1994, no writ) (refusing to apply the Berry formula to a defined contribution plan as such plans may be valued accurately at any time); Pelzig v. Berkebile, 931 S.W.2d 398, 402 (Tex. App. – Corpus Christi 1996, no writ) (finding the Berry apportionment and valuation analysis inapplicable to a defined contribution plan and employing the same formula as in Baw). 12 DIVIDING PENSIONS § 1.3. 7
Page 1 and 2: No. 00-1325 IN THE SUPREME COURT OF
Page 3 and 4: AMENDED IDENTITY OF PARTIES AND COU
Page 5 and 6: III. 2. The court of appeals relied
Page 7 and 8: County of Maverick v. Texas Ass’n
Page 9 and 10: Reiss v. Reiss, No. 01-0251, 40 S.W
Page 11 and 12: VICTOR B. MEYEN & MARK W. DUNDEE, Q
Page 13 and 14: STATEMENT OF JURISDICTION This Cour
Page 15 and 16: STATEMENT OF FACTS A. The Divorce.
Page 17 and 18: one for the defined benefit plan an
Page 19: ARGUMENT I. Given the proliferation
Page 23 and 24: Thus, unlike defined contributions
Page 25 and 26: C. To accurately segregate communit
Page 27 and 28: Sequence Marital Property Defined C
Page 29 and 30: e paid to the alternate payee “if
Page 31 and 32: Moreover, such cursory divestiture
Page 33 and 34: of section 9.007 as the basis for i
Page 35 and 36: §§ 9.001-.002. Courts were also g
Page 37 and 38: intended to apply this restriction
Page 39 and 40: Whether the decree is unambiguous i
Page 41 and 42: entirely from non-divorce judgments
Page 43 and 44: [Treadway]. It is further ORDERED t
Page 45 and 46: (court recognizing that accrued ben
Page 47 and 48: Decrees that appear unambiguous whe
Page 49 and 50: This formula preserves marital prop
Page 51 and 52: D. When divorce precedes retirement
Page 53 and 54: In the Marriage, Employment, Divorc
Page 55 and 56: plan participant approaches retirem
Page 57 and 58: PRAYER This Court should grant Shan
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Petitioner's Brief on the Merits - Supreme Court of Texas

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