If You Divorce Before You Retire
If you divorce before retiring, the court that has jurisdiction over the dissolution of your marriage may require that your retirement benefit be divided with your former spouse because it constitutes marital property. The division of your retirement benefit may be determined by a divorce decree or marital property settlement agreement. In either case, if your former spouse is entitled to a share of your retirement benefit, and you would like CPF to pay that share directly to your former spouse, then you and your former spouse must file a qualified domestic relations order (QDRO) with the appropriate court. The QDRO also must be approved by CPF. Your divorce decree and/or marital property settlement agreement generally will not act as a QDRO because a QDRO must meet certain specific requirements before CPF will approve and implement it.
CPF has developed two different types of model QDROs that you may use as a template when preparing your own. (The type that you use will depend on your own personal situation.) Using a model can greatly speed approval of the QDRO by CPF, saving you both time and legal fees. We strongly recommend that you submit a draft QDRO to CPF for pre-approval before signing it and filing it with the appropriate court. If we receive an order that has been executed by both you and your former spouse (or your attorneys) or an order that has been certified by a court, CPF will place a hold on your account to prevent the payment of any retirement benefits until we either approve the order or the order is withdrawn.
Once a QDRO has been approved by CPF, you will not have to pay income taxes on any amounts paid from the Plan to your former spouse in accordance with the terms of the QDRO.
Unless a QDRO has been approved, CPF will not pay any portion of your retirement benefit to your former spouse. However, even if you do not have an approved QDRO, you may still be legally obligated to pay a portion of your retirement benefit directly to your former spouse, if required by your divorce decree and/or marital property settlement agreement.
If you are about to enter or have entered the divorce process, we recommend that you contact our Client Services group well before your court date. In addition, in the event of your divorce, you should also consider whether to update your beneficiary designation for the lump sum death benefit, if necessary.