Opinion ID: 1145441
Heading Depth: 3
Heading Rank: 3

Heading: Our Holding

Text: Based on the foregoing, we decide the cases before us as follows: In Ruggles, for the reasons and subject to the principles discussed below, we reverse the Court of Appeals and remand the case to the trial court to decide the parties' dispute over their marital settlement agreement. If the court finds that the parties agreed on when and how Nancy's share of Joseph's retirement benefits was to be paid to her, then that agreement should, of course, be enforced. We agree with Schweitzer that the rule for distribution of a nonemployee spouse's interest in a retirement plan, whatever the rule is, should be applied only in the absence of an agreement between the spouses on the subject. However, if the parties did not agree one way or the other on when and how Nancy was to receive her interest in Joseph's retirement plan, the court should reinstate its judgment awarding Nancy $753.94 per month as her community interest in Joseph's retirement plan. At the same time, we agree with the Court of Appeals that $182.98 of this amount should be paid directly by Joseph's employer, Sandia, through a QDRO. The court should enter such a QDRO, reduce Joseph's monthly obligation accordingly, and provide for Nancy's full entitlement to be paid to her on Joseph's actual retirement through an increased QDRO. We acknowledge that this resolution of the parties' dispute does not comport with what we have described as the preferred method of satisfying a nonemployee spouse's community interest in an employee spouse's retirement plan  namely, a lump sum distribution, through other assets (including an installment obligation secured by a lien on other assets and bearing interest) and utilizing a QDRO to the maximum extent available, equal to the present cash value of her interest in the plan. However, Nancy has raised no issue about the court's failure to make a lump sum distribution, and Joseph has at no point contended that such a distribution was preferable to the manner in which the trial court divided the pension benefits. In any event, the parties' other assets have been divided pursuant to their MSA, and it would seem unwise to attempt to unscramble the eggs at this point. On remand, however, either party may request the court to revisit the questions of present-value determination and distribution, and the court may exercise its sound discretion in deciding how to deal with any such request. [15] If revisited, the present value of the parties' community interest in Joseph's retirement plan as of the time of dissolution should be determined in accordance with the principles described in this opinion, supplemented by expert or other evidence. In particular, and in addition to discounting for the time value of money (interest or investment yield), the court should apply an appropriate discount to the otherwise determined present value to account for the possibility that Joseph will die before he actually retires. See Projector, supra, 50 L.A.B.Bull. at 233-35. [16] Such a discount can be determined using readily available mortality tables to derive the probability that Joseph will survive from the date of dissolution to the date he attains normal retirement age under his employer's pension plan (which the trial court found was age 65). In this connection, we reiterate that the present value of an employee's interest in a retirement plan, even when the interest is fully vested and matured, is not the same as the employee's right to future pension payments for the rest of his life discounted only for the time value of money. Although we hold in this opinion that a nonemployee spouse is entitled to an immediate distribution when dissolution occurs after the employee spouse's interest is vested and matured, that distribution, if made in a lump sum, does not necessarily equal the present value, discounted only for interest, of the employee's future pension payments. All during the parties' marriage, the spouses' right to receive retirement benefits was contingent upon the employee's actual survival; that contingency survives the marital dissolution and should be recognized in assigning a present value to the community's interest. [17] Thus, when dissolution occurs after vesting and maturity, a present-value determination should be made, applying the principles outlined above, and the nonemployee spouse's interest should be distributed in a lump sum (or comparable distribution) using a QDRO to the greatest extent possible. If a lump sum distribution is not practical or feasible, for any or all of the reasons about to be mentioned, the court may award the nonemployee spouse an amount payable by the employee spouse (reduced by any QDRO amount, if available) equal to the share of the retirement benefit she would be entitled to receive if the employee spouse elected to retire. It must be recognized that any such periodic payment is a form of deferred distribution, even though commencing immediately, and as such is subject to all, or at least most, of the shortcomings of the reserved jurisdiction method of distribution. That is, it does not end the parties' association with one another, does not relieve the court of the necessity to supervise their relationship, and is subject to all of the practical problems inherent in the reserved jurisdiction method. Furthermore, and perhaps more importantly, the nonemployee spouse's right to receive payments from the employee spouse may terminate on the latter's death, is probably (at least as a practical matter) not alienable, and is probably not transmissible at death. Nevertheless, there undoubtedly will be some occasions when this or some other form of deferred distribution should be employed. One such occasion will arise when the court has no satisfactory evidence upon which to make a finding of present value. Another will relate to the parties' financial circumstances: If there are no other assets, or insufficient assets, or unsuitable assets, with which to satisfy (or secure) a lump sum distribution, the court may be forced to award the nonemployee spouse's share as it comes in. A third, and very important, factor is the undesirability of forcing, however indirectly, the employee spouse to retire prematurely and remove himself from the workforce. There may well be other factors that will counsel against use of the lump sum method of distribution and in favor of the reserved jurisdiction method. As already indicated, we leave the choice of method, as well as its implementation, to the sound discretion of the trial court  subject, however, to the preference we have expressed in favor of the lump sum, present value, cash-out method of distribution. In Mick, we similarly reverse the Court of Appeals and remand to the trial court with instructions to vacate its judgment, to the extent that judgment dealt with Norman Mick's interest in his ex-wife Hazel's federal civil service retirement benefits, and to enter a new judgment awarding Norman, effective as of the date Hazel's interest in her retirement matured, [18] a lump sum distribution or, if the factors discussed above in connection with Ruggles indicate otherwise, a periodic payment from Hazel in accordance with the formula already determined by the trial court. As in Ruggles, it may be impracticable at this point to award Norman a lump sum payment of the present value of his community interest in Hazel's retirement plan. In fairness, since the trial court awarded Hazel a portion of Norman's retirement benefits under the state Public Employees Retirement Association system when and if benefits are paid, the court may permit that portion of the judgment to be reopened as well to provide an offset to Hazel's obligation to pay to Norman his share of her retirement plan. In all events, the trial court should equitably adjust the rights of the parties in each other's retirement plans, based on the principles announced in this opinion.