Legal situations such as divorce, child support, and/or federal and state levies may have an impact on the portion of benefits that you receive from the System. As such, upon receipt of a complete judgment or Order, our office will review it to ensure that it is in compliance with the statutory provisions and, when necessary, the System may also take it under advisement with the Arizona Attorney General’s Office. Please note that pursuant to statute, the System cannot withhold for spousal maintenance.
If the judgment or Order is considered acceptable by the System, the recipient will receive their share of benefits at the same time and in the same manner as the member. To further clarify, since the System is a Defined Benefit (DB) plan qualified under a 401(a) of the Internal Revenue Code, the System is unable to split a member’s account until the member elects a distribution, which means that the recipient or alternate payee will receive their share of applicable benefits when either the member terminates employment and elects a refund of contributions, upon the member’s election to retire, exit DROP, or if the member is already retired, the benefits will be split. If the member is retired, all acceptable judgements, Orders and forms, as applicable, must be received by the 10th of the month in order to be processed at the end of that same month.
Divorce/Domestic Relations Order (DRO)
In order to determine if an account is required to be split, please mail, fax, or scan/email a complete copy of your decree or legal separation, plus a complete copy of any attachments, exhibits or addendums, as referenced in the decree or separation. Unless you are electing to refund or retire within the next month or so, it may take up to sixty (60) days to review your Decree (or Legal Separation).
If a member's account is required to be split, a Domestic Relations Order (DRO) must be prepared. Once the DRO is drafted, provide our office with copy via mail, fax, or scan/email of the draft Order for review and approval prior to submitting it to the court. Once the court signs the DRO, it is required that the System receives a certified copy of the DRO. If the member is actively working, the DRO will be placed on file until the member elects to refund or retire. If the member is retired and the draft or certified Order is acceptable by the System, by statute, the System will split the members account and will hold the proportionate share until the certified Order is received, or will pay the alternate payee, as applicable, contingent on receipt of the required forms.
It is important to note that should the member predecease the alternate payee either prior to or after retirement, the share of benefits that the alternate payee was entitled to receive or was receiving, will cease upon the members death as the statutes for survivor and death benefits will commence.
Since retirement benefits are a lifetime pension, the System cannot determine a person’s life expectancy and therefore, is unable to determine the value of an account. It is recommended that you consult with a financial advisor to assist in this process.
If you had child support payments taken from your wages while you were employed and you are required to continue to make those payments, it is required that a support order is issued to our office by the court or clearinghouse directing the applicable Plan (PSPRS, CORP or EORP) to withhold for the child support payments. If the child support payments are expected to stop, the appropriate child support agency or court will be required to direct the applicable plan (PSPRS, CORP or EORP) with a stop order.
Child support payments are considered taxable income; however, taxes cannot be withheld from these payments. If you would like to change your tax withholding on the portion of benefits that you receive, new tax forms must be completed.
The System is unable to provide the Obligee with any child support information; the Obligee must contact the appropriate child support agency, or court, for information.
Federal and State Levy
If you are receiving a retirement benefit and the System receives an acceptable levy or Order, we are mandated to withhold the required amount from your benefit. When the levy is expected to stop, the IRS or state revenue office will be required to provide the System with a release of levy, or other acceptable Order.