There are two different scenarios as to how a member’s account can be affected through a divorce: either the member is entitled to their sole retirement account (indicated as a no-split), or the member is required to split their account with their ex-spouse, whom we refer to as an “alternate payee.”
If it is clearly stated in your Divorce Decree that you are entitled to your own ASRS benefit, then the ASRS will accept and process a full copy of your Divorce Decree, with nothing else required.
However, in the event of splitting an account, if the Divorce Decree is unclear or does not have all the required information, then the ASRS will require a Domestic Relations Order (DRO).
What is a Domestic Relations Order?
A Domestic Relations Order (DRO), per Arizona Revised Statute (A.R.S) § 38-773(H), is an order from the court that informs the ASRS how to either split or not split a member’s ASRS retirement account with their ex-spouse. For instance, the DRO will detail how the member’s benefit would be divided between them and their ex-spouse, whom we refer to as an alternate payee, upon the election of Retirement, Forfeiture, or as a Survivor Benefit. It also informs the ASRS how to pay out benefits should either party predecease the other. Furthermore, a DRO will be made specifically for the member and alternate payee, so it is recommended to consult legal counsel for advice on how a DRO should be completed before submitting it to the ASRS for processing.
What's in a DRO?
For the ASRS to accept and process a DRO, it must contain ALL of the following information:
- How the account will be split between the member and the alternate payee through either retirement, forfeiture, or the death of either party
- The date the member and the alternate payee were married
- Contact information for both the member and alternate payee
- Community interest end date or date of separation (this is not the date of divorce, but the date of legal separation)
- The value of the member’s benefit on the date of service of the petition for annulment, dissolution of marriage, or legal separation.
Additionally, the ASRS will require the DRO to inform the following:
- Indicating that the ASRS is required to pay and to whom
- How much must be paid out
- When will the payments start and stop
- What happens if either the member or alternate payee passes away before and after retirement
If any of this information is missing from a DRO, the ASRS cannot process it and will ultimately request a new one to be completed and submitted once more.
The ASRS Review Process
Whether submitted as a draft or certified by the court, reviewing a DRO takes an average of four to six weeks before a response is generated and sent to the appropriate parties via mail from the ASRS. When a draft DRO is reviewed, the ASRS will inform whether or not it would be acceptable, and if it is, request the certified DRO to be sent in. On the other hand, once a certified DRO is reviewed and accepted, the ASRS informs that the order will be complied with and action will be taken appropriately, whether immediately if the member is already receiving benefits or later when the member takes action on their ASRS account.
The ASRS will always recommend sending a draft version of a DRO before getting the document certified through the court to confirm that it can be accepted and processed.
Topics Covered on this page:
- What is a Domestic Relations Order (DRO)?
- What is in a DRO
- Common Split Methods
- The ASRS Review Process
- Beneficiary Information
- Frequently Asked Questions
Common Split Methods
Different options are available when an account is split according to a certified DRO. For instance, a DRO can specify a no-split, meaning the member is entitled to their sole ASRS retirement account, and the ASRS is not required to make any payments to the member’s ex-spouse. All other options will split a member’s ASRS account, and payments will then be made to the member and the alternate payee.
There is the option to split a member’s ASRS retirement account by either a specific dollar amount or percentage of the member’s monthly benefit as of the date of divorce or the end of community property date. For example, if a member’s monthly gross retirement benefit is $1,000 per month, but the alternate payee is entitled to specifically $400 of the member’s monthly retirement benefit, then the member would receive a gross monthly payment of $600.
Finally, the alternate payee can be awarded a percentage of the member’s monthly benefit through what the ASRS refers to as the Van Loan Formula. This formula will divide the total years of credited service while the member and alternate payee were married by the total years of credited service the member worked with the ASRS. This will then be multiplied by 50% to provide the total percentage of the member’s retirement benefit payable to the alternate payee.
Example 1: A member accrued 20 years of credited service while married and retired with 20 years of credited service:
Example 2: A member accrued 20 years of credited service while married and retired with 30 years of credited service:
Beneficiary Information
Please also be aware that under Arizona law, a spouse is automatically nullified as a beneficiary upon divorce or annulment of marriage, per A.R.S. 38-773 (D) (1). To rename an ex-spouse as a beneficiary or to name anyone else, a new Beneficiary Form must be submitted after the date of divorce. If beneficiary information is not updated after divorce or annulment of marriage, should an active member pass away, then the ASRS will be required to follow the Order of Priority method through A.R.S § 38-762(E), where Survivor Benefits would be paid in the following order:
- The member’s surviving spouse.
- The member’s surviving natural or adopted children in equal shares.
- The member’s surviving parents in equal shares.
- The member’s estate.
While the process for active members is the Order of Priority, if a retired member passes away who never updated their beneficiary after their date of divorce, then the ASRS is required to follow A.R.S. § 38-763. This statute requires the ASRS to pay either the named beneficiary or a member’s estate “at least the amount of the member’s contribution to ASRS plus interest.” If the primary beneficiary named was an ex-spouse, but never updated after the date of divorce, along with no certified DRO specifying to keep the ex-spouse listed, then if any benefits are still payable, they will be made to the member’s estate.
FAQ's
When I retire, will I be eligible to receive estimate checks while my retirement benefit is processing?
If your account is being split per a DRO, you will not be eligible for estimate checks. Once your retirement is finalized, you and the alternate payee will be paid retroactively to your retirement date.
If your account will not be split per a DRO, you will be eligible for estimate checks during the processing of your retirement.
Not familiar with what an estimte check is? Read this excerpt titled, "When Will I Receive My First Payment?"
I need the value of my benefit as of a specific date to process the splitting of my account. How do I obtain that?
Will a copy of my Divorce Decree be acceptable to process a split?
If your Divorce Decree has all the information a DRO would have, then the ASRS will accept a Divorce Decree. Please note that the ASRS must receive the full and complete Divorce Decree, including any additional documents referenced as included with the Divorce Decree. Please note that if a page is intentionally left blank within a Divorce Decree, it also must be included.
If your Divorce Decree does not have all the information that a DRO would have, we will request a Certified DRO in order to process a split.
I am already retired and going through a divorce. If my account is required to be split, when will my retirement benefit be affected?
I have a certified DRO on file that has been processed and approved as a no-split, but my ex-spouse is still listed on my account, and I updated my beneficiary to another person. Can I remove them?
Unfortunately, no. When the ASRS processes a certified DRO as no-split, your ex-spouse will remain on file for our records. Please remember that this does not entitle your ex-spouse to any benefits, as you updated your beneficiary designation to someone else. The only time your ex-spouse would be entitled to any benefits would be if you renamed them as your beneficiary.
Is there a limit to the number of DROs members can have on their ASRS retirement account?
There is actually no limit on the number of DROs that can be enforced on a member’s account. If there is already a DRO on file for a split and another one is received for another split, then the member’s remaining portion —after the first split— will be split based on the new certified DRO received.
Can a DRO require me to act immediately on my account and either retire or take a refund?
No, a DRO only informs the ASRS how to split an account. It does not order the ASRS to require the member to take action on their account, nor can the ASRS be ordered to pay a split portion to the alternate payee prior to paying the member.
