By Christine Steinmetz, Pension Attorney at the Mid-America Pension Rights Project at Elder Law of Michigan
You work hard for your money. You save and expect your retirement to go smoothly. However, many people retire and cannot find their pension or 401(k). This is because the company you worked for closed or was sold. If the company is still in business, then you may be told that there is no record of the company having your pension or 401(k).
Last October, I began working as an attorney with the Mid-America Pension Rights Project. The scenarios listed above are more common than I thought. I wanted to pass along some tips that can help you protect yourself and your future retirement.
First, keep your old paystubs, tax returns, statements, and all documents relating to your pension and 401(k). This can make it easier when contacting an old employer about your pension benefits. When a company is sold, the company may pay the pension benefit as a lump sum to the participant, the pension could be transferred to the new company, or it could be trusteed by a federal agency known as the Pension Benefit Guarantee Corporation (PBGC). Unfortunately, federal law states that it is your burden to prove that you had a benefit. Many people are surprised to learn this.
Another tip regards surviving spouse benefits. Prior to 1984, a participant (the employee who earned the pension) could unilaterally waive the pension benefit that would be received by the spouse after the participant’s death. Current federal law, pertaining to private pensions only, mandates that the surviving spouse must sign a waiver if it is decided that a portion of the monthly benefit will not continue to the spouse after the participant’s death. Even though the law changed to protect surviving spouses by requiring a written waiver, many spouses sign the waiver without fully understanding the consequences. Before signing a Surviving Spouse Waiver, contact a pension attorney so you fully understand your rights.
During a divorce people may not realize that a pension benefit is usually one of the biggest marital assets. Some pensions are worth hundreds of thousands of dollars and should be negotiated during the divorce settlement. I would recommend that you retain a family law attorney to advocate for you so your rights are protected. Most people do not think about retirement in their thirties and forties, but an ex-spouse’s pension benefit can supplement your retirement income. I recently had a client who received her ex-spouse’s pension benefit that was covered in the Judgement of Divorce. The pension benefit paid for the client’s home mortgage.
If the pension is not mentioned in the Judgement of Divorce, then you may not have any rights to your ex-spouse’s pension benefit. Your attorney should have a Qualified Domestic Relations Order (QDRO) completed and presented to the pension plan before the divorce is finalized. A QDRO states who the beneficiaries are of a pension plan. My final tip for people going through a divorce is to retain an experienced family law attorney to protect your future retirement.
The Mid-America Pension Rights Project is funded by the Federal government through a grant provided by the Administration for Community Living and is a program of Elder Law of Michigan, Inc., a 501(c)(3) non-profit organization.
Since the program began in 1998, the Pension Project has assisted over 14,000 clients and recovered over 69 million dollars in pension benefits. The Pension Project assists clients that either worked in or are currently living in Indiana, Kentucky, Michigan, Ohio, Pennsylvania, and Tennessee. For more information, check out Mid-America Pension Rights Project.
If you need help with or information about your pension or 401(k) benefit, please call the Mid-America Pension Rights Project at 866-735-7737 to schedule an appointment with one of our experienced attorneys.
The information in this article is general and not intended to be a substitute for legal advice. In any legal matter, you should always consider consulting with an attorney for specific advice.
Christine Steinmetz is a part-time Attorney at Elder Law of Michigan and has been a member of the Elder Law team since 2011. As an attorney at Elder Law, Christine advises clients on issues including Medicare/Medicaid, wills and trusts, estate planning, landlord/tenant, and consumer law.