More Alabama State Retirement Plan Mischief

Every divorce lawyer knows that Retirement Systems of Alabama won’t respond to a Qualified Domestic Relations Order. It’s a stupid rule, of course, fueled more by the crass selfishness of legislators (all of whom are participants in the state retirement system) than by any possible logic or reason. But it is the law in Alabama, and the only way it’s going to change is for the citizens to shame the legislature into it.

Poor Barbara Prater Hallmark figured that out too late. She agreed to terms in her divorce settlement that said that she “shall receive and is hereby awarded fifty (50) percent of all amounts and/or shares in [her husband’s RSA account] … The date for calculation of the percentage hereby awarded to [Ms. Hallmark] is the date of this agreement, May 19, 1998, and the funds or shares, hereby awarded to the wife, shall be transferred to her account in accordance with the provisions of the Qualified Domestic Relations Order entered this day, and adopted herein by reference as if fully set out herein.”

Of course, when Ms. Hallmark or her lawyer sent the QDRO to RSA, David Bronner and his staff just took one look at it and giggled. Then she did the natural thing: she petitioned for modification. Saying she had recently discovered that the QDRO was unenforceable and asking the court to transfer to her 1/2 the “value of the former husband’s TRS (Teachers’ Retirement System, part of RSA) account.”

After the parties stipulated that the husband’s contributions totaled $24,745.38, the trial court entered an order awarding Ms. Hallmark $12,372.69 (1/2 the total contributions) plus statutory interest, in lieu of distribution from the husband’s TRS account. The husband appealed, and the Alabama Court of Civil Appeals reversed, in the case of Hallmark v. Hallmark, Case No. 2040193/2040339 (Ala. Civ. App. November 23, 2005).

The Appeals Court acknowledged that the trial court had “the inherent authority to interpret, implement, or enforce its own judgments” but said that this authority does not extend to changing an otherwise effective and unambiguous final order.

In the case now before us, the divorce judgment clearly states that the trial court awarded the former wife “fifty (50) percent of all amounts and/or shares in [the former husband’s TRS account].” Therefore, the divorce judgment unambiguously states that the trial court awarded the former wife one-half of the funds in the former husband’s TRS account rather than a judgment for a sum certain. Thus, the order under review awarding the former wife a judgment against the former husband for a sum certain in lieu of the award of one-half of the funds in the former husband’s TRS account constituted a modification of the property division in the original divorce judgment more than 30 days after the entry of the original divorce judgment. See [Fielding v. Fielding, 843 So. 2d 766, 770 (Ala. Civ. App. 2002)]. Therefore, we reverse the trial court’s judgment and remand the case to the trial court for further proceedings consistent with this opinion. Our resolution of this issue pretermits discussion of the remaining arguments raised by the former husband.

The Appeals Court is correct, of course. So what now becomes of Mrs. Hallmark? She’s up the Alabama State Retirement Creek without a paddle. Perhaps she will become the poster child for a movement to make state retirement accounts amenable to QDROs just like any other retirement plans.

14 comments

  1. tina says:

    I am going through a divorce and would like to know whether or not my spouse is entitled to any of my retirement benefits. I have been contributing 5% to Teachers Retirement System for 22 years and am looking toward retirement in the next couple of years. My lawyer has assured me that my retirement is safe and cannot be split as a part of the divorce settlement due to legislative protection but I would like a second legal opinion. Can you explain?

  2. L. W. says:

    Lee:

    According to a lawyer in Alabama -I- consulted, she said i
    CAN get some of my spouse’s state retirement in event
    of divorce. Should I drop her like a hot potato if this
    is what she thinks?! You stated in your website that
    EVERY lawyer knows about RSA and divorce.

    If you’ll check on a “Pension Rights” website (don’t
    have the exact address), only 5-6 states in the U.S.
    disallow divorcee awards per its state pension plan —
    most of them are Southern states — and Alabama is
    one of them.

    I never liked David Bronner anyway — maybe this is
    one to add to the list of reasons why!

    So, in other words, if my spouse had a pension plan
    in any OTHER corporation, company or business, i might
    could get some of that money in event of divorce — but
    because i have the misfortune of being married to
    someone in the RSA, i don’t get a dime from it…after
    putting up with an emotionally, mentally and financially
    abusive spouse for 31 years?!

    These are basically just comments, not necessarily to
    post to/for “everybody”!

    Thanks for your time!

  3. Lee Borden says:

    Let’s be careful about how this works. I’m not saying you can’t enjoy the wealth represented by your spouse’s state RSA plan. I’m saying only that RSA will not honor a QDRO. The judge has full discretion to order (and many do order) that the recipient pay to his or her ex-spouse a portion of each payment as that payment is received.

  4. Ann Watson says:

    My husband’s former wife was awarded a portion of his retirement in their divorce (which took place in Colorado). We are now residing in AL. It looks as though he may end up taking a disability retirement due to injuries he sustained while in service. Are disability retirements exempt from any sort of divorce settlements in Alabama (if we move the case here)?

  5. Lee Borden says:

    First, as the new wife, you REALLY don’t need to be driving this ship. This is an issue between the man you married and his former wife about an obligation you knew all about when you married him. Second, I’m not at all confident you could “move the case here,” particularly if the Ex is still living in CO. Third, sharing of retirement plans is an aspect of property division, normally not subject to revision because of changes in circumstances.

    That having been said, there are some cases, particularly involving military retirement, where the participant has been able to stiff the alternate payee by taking disability. It’s always possible your husband will be able to stiff his Ex in a similar way, although I hope he fails.

  6. Ann Watson says:

    Sir (and I am the HUSBAND using the term “Sir” loosely to describe you),
    My wife simply asked this question for me. Neither of us need your condescending attitude or unprofessional attitude.

    I suppose you are answering questions on the internet because your poor developed social skills and obvious lack of family case knowledge. It is apparent that you holier than thou attitude toward you client is why you’re reduced to internet ambulance chasing.

    For your information, the ex deserted me prior to my 4th back surgery and began chasing men in GEORGIA. I was transferred to Alabama in the performance of my job. I am now facing a significantly reduced pension and was simply trying to find out if a disability retirement had the same protection as a VA disability pension.

    Thank you for worthless two cents.

    I (the wife) would also like to say that your attitude toward my question was both very demeaning and unprofessional. I am not “driving any ship” and yes, I am VERY aware of the situation that I married into and you, SIR, are not. You would do well to simply anwswer questions on this blog without assuming that everyone has some sort of sneaky ulterior motive.

  7. After 30 years my husband divorced me,and i know we where putting money in a retirement account.
    i like to know if i am illigible to that money.
    or what kind of lawyer i need to consult.
    he was a lawyer and a real estate developper,and a good one.

    what are my rights to that account,if any,and how should i investigate that matter

  8. Lee Borden says:

    If the divorce was effective more than 42 days ago, you are out of luck. If you and your husband are not yet divorced, you just need to talk to a good divorce lawyer.

  9. Teresa says:

    I am currently in the same situation you talk about in your article re: QDRO and RSA1. I have a court order from Judge Bush in elmore county to get $21,000 (10%) of my ex husbands’ account, this was ordered in July 2008. They responded stating they are not required to honor a QDRO. My lawyer took it back to Judge Bush to get it changed to order my husband to withdraw the funds himself (he is already retired). Judge Bush responded that it is not in his jurisdiction. So now what???…Any suggestions??

  10. Lee Borden says:

    I think you and your lawyer need to have a heart to heart. As the result of your lawyer’s oversight, barring simple generosity (perhaps driven by shame) from your Ex, I think you are out $21,000.

  11. Kath says:

    Mr. Borden, is it still true that the RSA does not honor QDROs? I see that in ’05 when this topic was posted, you proposed legislation for change and I’m just wondering if it was. Thanks!

  12. Jan says:

    Mr. Bordon, am I to take all of this to mean that since the retirement system of Alabama will not abide by my QDRO and my lawyer SHOULD have known about this AND the Judge that signed off on the order…there is a mal-practice case to be filed? If the courts will not force compliance of the order then WHERE do all of us go to get the retirement funds we have thought for many years were there for us.

  13. Lee Borden says:

    I am smart about many things, but the standards of legal malpractice are not among them. I’m sorry.

    In answer to your second question, the judge has many options, including requiring the participant to send money to the divorced spouse each month.

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