Q: I am a CSRS employee and thinking about retiring soon. I can receive an estimate of my retirement annuity from our IRS retirement specialist. But since I have a divorced ex-spouse and my divorce decree has a formula type clause I don’t know how OPM will apply this formula in determining my annuity. Is there any way to get an estimate from OPM before I retire as I don’t want to retire and find that I should have continued working?
Also, if there is to be a correction to my divorce formula by going back to court, can this be done after I retire or must it be done prior to my retirement to satisfy OPM?
A: This is an excellent question, and not one that I am frequently asked. Therefore, I ran it by a colleague who specializes in assisting federal employees and annuitants with divorce matters. A lot of this answer is courtesy of Dan Jamison, CPA.
It’s sometimes difficult when planning for retirement (and your retirement budget) if you’re unsure what portion of your federal pension is payable to your former spouse by OPM. The court orders that award a portion of your federal pension to a former spouse are called “Court Orders Acceptable for Processing”, or COAPs. A COAP may award a former spouse a discrete dollar amount, a flat percentage of the annuity, a lump-sum award (paid out as 50% of the annuitant’s pension until satisfied), or most commonly, a pro-rate share. To confuse things even more, the former spouse’s award can be based off of the gross, reduced or net annuity payable to the annuitant.
There may also be a survivor annuity granted by the COAP. Sometimes that cost is allocated to the annuitant, sometimes the former spouse, and in many cases divided evenly between the parties.
There may also be a provision in the COAP covering what happens if your former spouse predeceases you. Sometimes the former spouse’s payment reverts back to the annuitant, and other times it is payable to the estate or children of the deceased. As you have already learned, OPM will not assist you in determining the amount that will be paid to your former spouse. Upon your retirement, OPM will follow the COAP on file, as well as their policies, and award the former spouse their share with no advance warning or calculation. It’s very rare, but OPM does make mistakes in interpreting COAPs (especially if the language in the improperly interpreted COAP was similar to different, but commonly used, language).
As to the second part of your question; “Yes,” OPM will accept an amended COAP. The amended COAP may change any number of parameters or awards specified in the original COAP, with one important caveat – you may not amend a COAP to make a change to the survivor annuity after the retirement or death of the employee.
Dan Jamison, CPA offers services that can assist you in determining the approximate amount that OPM will award to your former spouse based upon a review of your COAP and the particulars of your federal career. Dan can be reached at www.fersguide.com or by email at email@example.com.