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DISTRIBUTION OF PENSION BENEFITS AND OTHER FORMS OF RETIREMENT BENEFITS IN DIVORCE UNDER ILLINOIS LAW

Under Illinois law, pension benefits earned during the course of the marriage are considered marital property despite the fact that they may not actually be distributed until after the marriage. In re Marriage of Abma, 308 Ill. App. 3d 605, 615, 720 N.E.2d 645, 654 (1999). Those benefits have been described as a form of deferred compensation earned by an employee for his service to an employer. Abma, 308 Ill. App. 3d at 615, 720 N.E.2d at 654. As such, they are treated as earnings, and to the extent that a spouse earned those benefits during the marriage, they are considered marital property. Abma, 308 Ill. App. 3d at 615, 720 N.E.2d at 654.

In situations where amounts may be added to the participant’s account after the date of dissolution that were earned during the parties’ marriage, the courts in Illinois have approved the use of a percentage formula.   In its decision in In re Marriage of Kathleen Jamieson, 379 Ill. App. 3d 100 (2008) the Appeals Court approved the trial court’s use of the following language, which provides for both the balance as of the date of the divorce, and a percentage formula for dividing post-divorce increases earned during the marriage:

"Amount of Alternate Payee's Benefit:

Amount of assignment: This Order assigns to Alternate Payee *** 55% of the money purchase account of the Participant's Total Account Balances, of said above accounts as determined by the plan for Plan Year ending September 30, 2005.

Post-Divorce Contributions Attributable to Periods Before Divorce: In the event that the Plan made any contributions to the Participant's account(s) for Plan Year ending September 30, 2006, then the Alternate Payee shall receive 41.25% (which is 55% of 75% of the Plan Year) of such contributions as of September 30, 2006."
Courts retain jurisdiction to modify QDRO’s, as may be necessary to comply with the Plan’s requirements or effectuate the judgment of divorce.  In re Marriage of  Allen, 343 Ill. App. 3d  410 (2003). In In re Marriage of  Allen, the appellate court approved the trial court’s issuance of a modified QDRO which distributed the husband’s pension by calculating the wife’s share as follows:
"multiplying the Participant's Accrued Benefit by a Coverture Fraction (less than or equal to 1.0),   the numerator of which is the number of months of  the Participant's participation in the Plan earned   during the marriage (from August 18, 1981 to   October 6, 1995), and the denominator of which is the total number of months of the Participant's   participation in the Plan as of the earlier of his   date of cessation of benefit accruals or the date   that Alternate Payee commences her benefit hereunder."
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