Episode Transcript
[00:00:04] Speaker A: Welcome to Reyna Retirement. Reyna Reyes has dedicated her career to helping people make smarter financial decisions. Reyna Retirement is all about breaking down complex financial concepts into language you can actually understand.
Now here's the co founder of American Federal Benefits Consultants, Reyna Reyes.
[00:00:24] Speaker B: Well, we all know the song, the story of love. You've got to give a little, take a little, let your poor heart break a little. That's the story of love.
And when that time comes and you know there's no, there's no love lost or no love remaining, sometimes people do separate and that becomes permanent. Well, if you were a federal or postal employee when that happened and you had a marriage during that time that you were working, there might be a court order. There might be something called a quadro and there might be something called an apportionment that you have to pay. And there might be something called money from your TSP that you got to give to your former spouse.
Who knows what that is. And it can come in a variety of ways. Now I was recently asked about this, like, hey, how do I make sure. And this could be on either side. Like you may be, you may be the recipient of the apportionment or you may be the payer of the apportionment. Either way, you want to know what's going on? How much money am I paying? How much money am I getting? When am I paying it? When am I getting it? And how can we confirm this? Well, first of all, when that separation happens, you're going to get a court order and you're also going to see the quadro. Both parties, it's very full disclosure, but the quadro is a qualified domestic relationship order.
What's crazy is this is a document ordering OPM to pay in a certain way. And there's a pretty standard mathematical equation they use to determine how you get paid. It's based on how many years you were married divided by. They do months actually how many years you were married divided by the years you actually worked. And then there's some other calculations in there to determine exactly how much you're paid as a percentage of your pension. And that is again an apportionment. So let's do some definitions. That is an apportionment because I'm paying you a portion of my pension when I retire. Because you earned the portion because we were married for that time period.
There's another scenario that can also be ordered in conjunction with that, which is a survivor benefit. Now that is, you've heard of the survivor benefit because you've got to choose one. If you're married, whether it's half of your pension 25% or zero, but it cost you money. It reduces your pension by 10% if you leave your current spouse half. Or it reduces your pension by 5% if you leave your current spouse a quarter, but you pay nothing if you leave them zero.
Now, the judge in your court order in your proceeding might order you to leave a survivor benefit to your now former spouse and that will still charge you, right? So you may have an abortion and be required to spend 10% out of your pension to leave that former spouse half of your monthly pension if you pass away as well.
And I've seen some that continue whether they're living or not. It just depends on how this court order is written.
So that is a possibility. There's also a scenario where unrelated to these, you may be ordered to pay a portion of your tsp. You may be ordered to pull some out, share the taxes, and give that portion to the other party.
So there's quite a few things that can happen in a separation.
Obviously none of them necessarily fun, right? But it's things that you want to be aware of because sometimes if you're going to the negotiation table, you may think short term versus long term. Sometimes it's. Sometimes you may prefer to offer a higher percentage of TSP now rather than paying, you know, such a heavy portion of pension. I'm just giving you ideas. I don't even know. These are just things that you want to consider. But if that's the case, if you have that document, put it in a very safe place so you never lose it. You don't want to keep looking at it. Obviously you want to set this. You want to put this time behind you, but you want to be able to pull it out when you need it. I've worked with people who are having to go to the court, the clerk of the court, try to get copies of their stuff and they can't find the quadro or they can't find whatever, so they just don't know.
And OPM usually gets a copy of it after the separation. So they have it on file for the person. That happens pretty often. And then if you can't find it, they say, no worries, we have it.
But I've even seen people make amendments to quadros long after the fact.
But in order for an amendment to happen, you got to have people agree.
So very not common could happen.
Doesn't happen very regularly.
Now these are some things you just want to be aware of. Is there life after a divorce? Absolutely. Absolutely. And you don't have to work forever. I do have some people that swear to me that that's what they're going to do because they just don't want to pay the ex. Right. That's every person to themselves. Right? Every. Every. Everyone's got their own. Their own path to walk. But these are the things you just want to be aware of, right? That you want to be aware of. There are some separations, some divorces that end in nothing, neutral. Especially with Twinkies, where I have two postal or federal employees and they're divorcing, and they say, you keep yours, I keep mine, nothing.
What's crazy is that in my experience, that's been the most common outcome. When somebody says, oh, I'm divorced. I'm like, do you owe any money if you're divorced, if you. When you retire? And they're like, absolutely not. They kept theirs, I kept mine. Nobody has anything else to pay ever again in the future of anything. But on the other end of that spectrum, I've also seen people where. I've seen. I've seen somebody pay alimony forever and has to pay an apportionment and has to pay for the cost of the Survivor benefit.
That is. That will suck you dry. I mean, that is just a. That is. To me, that was just unbelievable. I couldn't believe it. I felt like I was the one getting punched in the face. I just couldn't. Anyway, I felt for this person. So there's either ends of the spectrum. So if this is something you're dealing with or think you might be dealing with, just, you know, prepare yourself that these are some potential outcomes and there may be ways. You know, you talk to your attorney and you can protect yourself.
If you need help with any of this, let me know. My team and I are well equipped to work with you to help plan for the outcome of the.
The outcome of the income. So that is what your pension will be after. Not just tax tag and title like we usually talk about, but also minus the expected apportionment.
And my math has been not too far off. I've done some kind of rudimentary math before for people and like, hey, you were only 60 bucks too high or 20 bucks too low or whatever. So pretty good example of the expectation of what that was going to end up being.
So not encouraging it. You know, just want to let you know these are things you want to be aware of to prepare for. And again, that's what planning is all about. You plan before so that you can be prepared when something happens. But reach out and get scheduled with us and we'll go over everything and we look forward to talking with you soon.
[00:07:37] Speaker A: Thanks for listening to Reyna Retirement With a strong commitment to ethical standards, Raina works hard to find the right solution for each individual or family who reaches out for advice. To contact Raina directly, call 850-450-6500. That's 850-450-6500. Or to reach the team at American Federal Benefits Consultants, call 1-800-872-8857. That's 1-800-872, 8857. You can also go online to americanfederal.org not affiliated with the United States Government. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. The information is intended to be educational in nature and is not not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. American Federal Benefits Consultants is an independent organization, not a government agency or affiliated with the Federal Government or any state government. The terms CSRs, FERs, FELI, and FEHB are all registered trademarks of the U.S. office of Personnel Management. American Federal Benefits Consultants, Agents Consultants, or any independent contractors do not provide tax, legal or investment advice and do not engage engage in the solicitation or sale of securities. Consult with your tax advisor or attorney regarding specific situations.
