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Guidelines for composing court orders

Review recommended language for drafting court orders. This information applies to TRA members who have not yet retired.

Members

Background information

These guidelines provide preferred language to assist in drafting a court order that aligns with Minnesota law. While these are recommendations, other formats may be accepted if they meet statutory requirements.

Mandatory legal finding

Under Minnesota Statutes, section 518.58, subdivision 4, your order must include a finding that there is insufficient liquid or readily liquidated marital property available to equitably offset the pension value, necessitating a division of benefits.

To ensure your order is administrable and avoid the expense of correcting a rejected order, we strongly recommend submitting a proposed draft to TRA for review before it is signed by a judge.

 


 

 

Language for dividing benefits

In the following paragraphs, the TRA member is the Participant and the former spouse is the Alternate Payee.

1. The division formula (coverture fraction)

Use the following language to award a portion of the marital interest to a former spouse. Please provide exact dates for the numerator to ensure an accurate service credit calculation.

  • Formula language: “The Alternate Payee shall receive a fixed percentage of Participant’s interest in the TRA pension plan if, as and when benefits become payable, determined by the following formula: [Insert Fraction, e.g. One-Half] multiplied by any benefit payable, multiplied by a fraction, the numerator of which is the years of service credit earned between [Date of Marriage] and [Date of Divorce or Other Valuation Date], and the denominator of which is the total years of TRA service credit.”

2. Succession rules (if alternate payee dies first)

The order should specify if payments revert to the Participant or continue to the Alternate Payee’s named beneficiary or estate.

  • Reversion option: “In the event that the Alternate Payee predeceases the Participant, all sums payable to the Alternate Payee from the Plan shall revert to the Participant.”
  • Named beneficiary/estate option: “In the event that the Alternate Payee predeceases the Participant, all sums payable to the Alternate Payee from the Plan shall be paid according to the terms of a beneficiary form filed by the Alternate Payee with TRA, or if no beneficiary form is filed with TRA, all sums payable to the Alternate Payee from the Plan shall be paid to the Alternate Payee’s estate.”
  • If the order is silent, TRA defaults to the Named Beneficiary/Estate Option.

 

 

 

Postretirement survivorship and plan selection

These provisions govern payments issued after the Participant’s death and are based on the annuity choice formally elected at retirement. If the court order does not restrict the annuity choice, the Participant may elect any of the six annuity plan options available at retirement.

  • Mandatory election: If a lifetime benefit is required for the Alternate Payee, the order must state: “Participant shall elect the [50 / 75 / 100] percent survivorship option naming Alternate Payee as the joint annuitant for the marital period.”
  • Actuarial reduction for survivorship options: Survivorship options result in a reduced monthly benefit to account for lifetime coverage for two or more individuals. TRA does not allow for customized cost-sharing of this reduction. The actuarial reduction is applied to the total benefit, and the Participant and Alternate Payee each receive their court-ordered share of that resulting reduced amount.
  • Limits: Total survivor benefits cannot exceed 100%. If the Participant remarries, the combined benefits for a former and current spouse must meet the TRA plan rules.

 

 

 

Preretirement beneficiary and survivor protection

A divorce automatically revokes a former spouse as a beneficiary. If the member dies before retirement, death benefits are paid according to the specific terms of the court order and the member’s current beneficiary form.

  • Option 1: proportionate share (default): The Alternate Payee receives a proportionate share (based on the coverture fraction) of whatever death benefit is actually payable at the time of the Participant’s death. This could be a share of a lump-sum refund of contributions plus interest, or a share of a monthly annuity being paid to a different beneficiary (such as a current spouse or dependent child).
  • Option 2: surviving spouse status: The court may order that the Alternate Payee be treated as a "surviving spouse” for the purpose of receiving a preretirement death benefit. This provides the former spouse a lifetime monthly benefit if the member dies before retirement.

Critical action required: For either option to be enforceable, the Participant must file a Pre-Retirement Death Benefits form with TRA specifically naming the former spouse after the divorce is finalized.

 

 

 

Prohibitions and protections

  • Refunds: To prevent the Participant from liquidating the asset before retirement, include: “The Participant shall not assign, withdraw, or otherwise encumber the TRA contributions.”
  • Privacy: Do not include Social Security Numbers or dates of birth in your public court order. Submit these via Confidential Information Form (also known as Minnesota District Court Form 11.1) directly to TRA.

Taxes and adjustments

  • Tax liability: “Each party shall be responsible for any taxes due on their respective shares of the proceeds received from the Plan.”
  • Postretirement increases: Both parties will receive postretirement increases on their respective portions unless the order explicitly excludes the Alternate Payee.