KRS § 161.700 — KY Code / Title XIII / Chapter 161 / Section 161.700
161.700 Funds exempt from taxation and process -- Taxability after December 31, 1997 -- Benefits not considered marital property -- Qualified domestic relations order
Status: in_force

161.700 Funds exempt from taxation and process -- Taxability after December 31,

1997 -- Benefits not considered marital property -- Qualified domestic relations

order.

(1) Except as otherwise provided by this section and KRS 161.655(5), the right of a

member to a retirement allowance and to the return of contributions, any benefit or

right accrued or accruing to any person under KRS 161.220 to 161.716, and the

money in the various funds established pursuant to KRS 161.220 to 161.716 are

hereby exempt from any state or municipal tax, and shall not be subject to

execution, garnishment, attachment, or other process, and shall not be assigned.

(2) Notwithstanding subsection (1) of this section, retirement benefits accrued or

accruing to any person under this retirement system on or after January 1, 1998,

shall be subject to the tax imposed by KRS 141.020, to the extent provided in KRS

141.010 and 141.0215.

(3) Retirement allowance, disability allowance, accumulated account balance, or any

other benefit under the retirement system shall not be classified as marital property

pursuant to KRS 403.190(1), except to the extent permitted under KRS 403.190(4).

Retirement allowance, disability allowance, accumulated contributions, or any other

benefit under the retirement system shall not be considered as an economic

circumstance during the division of marital property in an action for dissolution of

marriage pursuant to KRS 403.190(1)(d), except to the extent permitted under KRS

403.190(4).

(4) Qualified domestic relations orders issued by a court or administrative agency shall

be honored by the retirement system if:

(a) The benefits payable pursuant to the order meet the requirements of a

qualified domestic relations order as provided by 26 U.S.C. sec. 414(p). The

retirement system shall follow applicable provisions of 26 U.S.C. sec. 414(p)

in administering qualified domestic relations orders;

(b) The order meets the requirements established by the retirement system and by

subsections (4) to (12) of this section. The board of trustees of the retirement

system shall establish the requirements, procedures, and forms necessary for

the administration of qualified domestic relations order by promulgation of

administrative regulations in accordance with KRS Chapter 13A; and

(c) The order is on the form established by the retirement system pursuant to the

retirement system's authority provided under paragraph (b) of this subsection.

(5) A qualified domestic relations order shall not:

(a) Require the retirement system to take any action not authorized under state or

federal law;

(b) Require the retirement system to provide any benefit, allowance, or other

payment not authorized under state or federal law;

(c) Grant or be construed to grant the alternate payee any separate right, title, or

interest in or to any retirement benefit other than to receive payments from the

participant's account in accordance with the administrative regulations

promulgated by the system and as provided by subsections (4) to (12) of this

section; or

(d) Grant any separate interest to any person other than the participant.

(6) Any qualified domestic relations order submitted to the retirement system shall

specify the dollar amount or percentage amount of the participant's benefit to be

paid to the alternate payee. In calculating the amount to be paid to the alternate

payee, the court or administrative agency that is responsible for issuing the order

shall follow the requirements set forth in the administrative regulations promulgated

by the board of trustees. Notwithstanding any other statute to the contrary, the board

shall not be required to honor a qualified domestic relations order that does not

follow the requirements set forth in the administrative regulations promulgated by

the board of trustees.

(7) If the qualified domestic relations order meets the requirements established by the

system and by subsections (4) to (12) of this section, payments to the alternate

payee shall be distributed under the following conditions:

(a) If the participant is retired and is receiving a monthly retirement allowance,

the month following the date the retirement system receives a qualified

domestic relations order that complies with the administrative regulations

promulgated by the retirement system and subsections (4) to (12) of this

section; or

(b) If the participant is not retired, the month of the participant's effective

retirement date in which the first retirement allowance is payable to the

participant or the month in which the participant receives a refund of his or

her accumulated account balance as provided by KRS 161.470(6).

(8) An alternate payee's benefits and rights under a qualified domestic relations order

shall terminate upon the earlier of:

(a) The death of the participant;

(b) The death of the alternate payee; or

(c) The termination of benefits to the participant under any provision of KRS

161.220 to 161.716.

(9) An alternate payee shall not receive a monthly payment under a qualified domestic

relations order if the participant is not receiving a monthly retirement allowance.

(10) The cost of living adjustment provided to the participant pursuant to KRS 161.620

shall be divided between the participant and alternate payee in a qualified domestic

relations order as follows:

(a) If the order specifies the alternate payee is to receive a percentage of the

participant's benefit, then the cost of living adjustment shall be divided

between the participant and the alternate payee based upon the percentage of

the total benefit each is receiving upon the participant's retirement or upon the

date the order is approved by the retirement system, whichever is later; or

(b) If the order specifies that the alternate payee is to receive a set dollar amount

of the participant's benefit, then the order shall specify that:

1. The cost of living adjustment shall be divided between the participant

and the alternate payee based upon the percentage of the total benefit

each is receiving upon the participant's retirement or upon the date the

order is approved by the retirement system, whichever is later; or

2. The alternate payee shall receive no cost of living adjustment.

If the order does not specify the division of the cost of living adjustment as

required by this paragraph, then no cost of living adjustment shall be payable

to the alternate payee. If no cost of living adjustment is provided to the

alternate payee, then the participant shall receive the full cost of living

adjustment he or she would have received if the order had not been applied to

the participant's account.

(11) Except in cases involving child support payments, the retirement system may charge

reasonable and necessary fees and expenses to the recipient and the alternate payee

of a qualified domestic relations order for the administration of the qualified

domestic relations order by retirement system. All fees and expenses shall be

established by the administrative regulations promulgated by the board of trustees

of the retirement system. The qualified domestic relations order shall specify

whether the fees and expenses provided by this subsection shall be paid:

(a) Solely by the participant;

(b) Solely by the alternate payee; or

(c) Equally shared by the participant and alternate payee.

(12) The retirement system shall honor a qualified domestic relations order issued prior

to July 15, 2010, for prospective benefit payments if the order or an amended

version of the order meets the requirements established by this section and the

administrative regulations promulgated by the retirement system. The order shall

not apply to benefit payments issued by the retirement system prior to the date the

order was approved by the retirement system.