Change in Marital Status and Divorce Settlement

Thank you for initiating communication with us as it pertains to the change in your marital status and divorce settlement. We would be glad to work with you, your former spouse, and legal representatives. First, we will need authorization from the plan participant to share information. Please complete the form Authorization to Share Information, and return it to Benefits Services. To protect the privacy of our participants, we cannot furnish information to third parties and cannot follow up on the subsequent steps until we receive the signed consent. Consequently, we will freeze the account from distributions until the assets are transferred to the former spouse. Though temporary, this is standard procedure to ensure appropriate administration.

A brief overview of the things to consider, documentation requirements, and general guidelines can be gathered through the Summary of Divorce Guide.

A more detailed document that addresses plan rules for the RCA Retirement Program, is also available by downloading the Procedural Guide to Obtaining Distribution of Retirement Benefits Incident to Divorce. The Procedural Guide includes templates that should be copied in drafting of the Domestic Relations Order (DRO) and Qualified Domestic Relations Order (QDRO).

How does one determine which document has to be drafted--DRO and/or QDRO?

Please keep in mind that the RCA Retirement Program is comprised of two separate plans; each requiring a different domestic relations order:

  • RCA Retirement Plan (nonqualified deferred compensation plan). Church/employer contributions were credited to the RCA Retirement Plan until 12/31/2004. Thereafter, the plan was frozen from additional contributions. If the divorce decree affects the division of the RCA Retirement Plan, a Domestic Relations Order (DRO) is needed.
  • The RCA 403(b). Employee contributions were, and continue to be, credited to this separate account. Effective 1/1/2005, church/employer and employee contributions are credited to the RCA 403(b) account. If the divorce decree affects the division of the RCA 403(b) Retirement Program, a Qualified Domestic Relations Order (QDRO) is needed.

In other words, in order to determine whether or not a DRO and/or QDRO are necessary, participants, former spouses, and legal representatives will have to consider:

  • Plan participation

(i.e.: RCA Retirement Plan only or,

RCA Retirement Plan and RCA 403(b). Please note that plan participation can be viewed through www.netbenefits.com.)

AND;

  • Exact date of division as stated in the Judgment of Divorce.

What other documents are needed?

In addition to the Authorization to Share Information, we require the following completed documents to process the division of retirement assets:

  • Assignment of Rights form which requires Signature Guarantee.
  • Certified DRO--if division applies to the RCA Retirement Plan. It is highly recommended that drafts be submitted for plan sponsor approval before the DRO is certified.
  • Certified QDRO--if division applies to the RCA 403b Program
  • Certified copy of Judgment of Divorce

Does the Alternate Payee, or former spouse, need to submit additional documents to establish benefits?

Yes. Once all of the certified documents are sent to Benefits Services, the Alternate Payee needs to make decisions on benefits distribution. If the Judgment of Divorce calls for division of the two plans, each is subject to different rules and taxation.

  • If the Alternate Payee participates in the RCA Retirement Plan, the account balance cannot be rolled over but there are three options: full payout (pre-retirement), partial distributions (pre-retirement), systematic withdrawal payments (retirement). Since the RCA Retirement Plan is a nonqualified plan, the IRS does not mandate that you begin taking Minimum Required Distributions (MRD) once you reach the age of 70 1/2. Keep in mind, however, that distributions are reported on form W-2.

FULL PAYOUT

The full payout option would result in receiving the balance as a taxable transaction with automatic federal and state withholding. The amount of the payout will be reported in the tax year taken on Form W-2. Distributions from this non-qualified plan are reported as wages. The balance cannot be rolled over to an existing IRA or other qualified retirement plan. You may download the form "QDRO Alternate Payee Distribution" and form W-4.

PARTIAL DISTRIBUTIONS

The partial distribution is to leave the plan under the stewardship of the Board of Benefits Services. Upon reaching the age of 59.5, you may elect to receive 5% of the account balance as it was on the prior 12/31. As stated above, all distributions are taxable transactions with automatic federal and state withholding. Amounts distributed are annually reported in the tax year taken on Form W-2. Distributions from this non-qualified plan are reported as wages. The balance cannot be rolled over to an existing IRA or other qualified retirement plan. You may download the form "QDRO Alternate Payee Distribution" and form W-4.

SYSTEMATIC WITHDRAWAL PAYMENTS

The systematic withdrawal payment is to leave the plan under the stewardship of the Board of Benefits Services and begin withdrawing distributions. Since it is a non-qualified plan, the IRS does not mandate that you begin taking Minimum Required Distributions (MRD) once you reach the age of 70 1/2. In accordance with Article VIII of the plan document, you may receive periodic distributions before retirement. As stated above, all distributions are taxable transactions with automatic federal and state withholding. Amounts distributed are annually reported in the tax year taken on Form W-2. Distributions from this non-qualified plan are reported as wages. The balance cannot be rolled over to an existing IRA or other qualified retirement plan. You may download the form "QDRO Alternate Payee Distribution" and form W-4.

  • If the Alternate Payee is entitled to a portion of the participant's RCA 403(b) Program, the Alternate Payee must choose one of the two options: full payout (with tax withholding and 10% penalty if you are under the age of 59.5), or rollover (no tax consequence until you begin retirement distributions). Fidelity will report the transaction on form 1099R. If you move, please contact our office so that we may update your address. Please do not contact Fidelity Investments.