Dividing an interest in Nevada PERS (NV-PERS) is just as complex as any of the other pension plans. One of the biggest concerns of late, is that due to budget constraints, some of the current provisions on PERS are under scrutiny by the State Legislature.
QDRO Masters is keeping its thumb on the pulse of these changes and we modify our drafted orders to comply with any changes as they happen.
Nevada PERS vs Federal ERISA Law
In Nevada, state public employees fall under the Public Employees Retirement System (“PERS”), which in its modern form has existed since 1975, but was entirely revised and reorganized in 1993. Those who put the Nevada PERS regulations together chose to (confusingly) use the same titles, etc., as are in the federal ERISA law, and even copied some of the statutory language from the far larger, and more complex, federal law. However, a state pension plan (such as PERS) does not fall within ERISA, and the federal statutes do not apply to the plan, or to the benefits. Instead, there is an entirely different set of (State) laws that govern distribution of PERS benefits.
What is the Nevada Public Employees’ Deferred Compensation Plan?
The Nevada Deferred Compensation Plan (NDC) is a voluntary retirement savings program created to increase a public employee’s personal savings for retirement while lowering their current taxable income based on the amount of contributions actually made. This plan was adopted pursuant to Nevada Revised Statute (NRS) 287.250 – 287.370, and Title 26 of the Internal Revenue Code, Section 457(b), and acts as a quasi-IRA, wherein the employee makes contributions to their plan up to a specific dollar amount each year.
Who is Eligible for the NDC?
All current State of Nevada and Nevada System of Higher Education (NHSE) Employees are eligible to participate in the plan. Public employees from other local governments (county, city) that have obtained written consent to participate in the program are also eligible. The contributions made are then invested into a specific investment option of the employee’s choosing. These options come in several varieties to account for the employee’s age and the overall risk of the investments involved. It is important to note that investment earnings on the employee’s contributions grow tax-deferred, meaning none of the contributions are taxable until the actual money is withdrawn.
Can NDC Participants Name Beneficiaries?
Participants in NDC are also encouraged to name one or more beneficiaries in the event of their death. A beneficiary may be an individual(s), estate, trust, charity, or business entity. The plan is very flexible and simply affords certain public employees an alternative to the traditional PERS defined benefit plan.
What Happens if a PERS Member Dies?
If a PERS member dies prior to retirement, or during retirement, eligible survivors are entitled to a monthly survivor annuity. A member may designate, in writing, a survivor beneficiary and one or more additional payees to receive the payments provided to the deceased retiree.
How are Survivor Benefits Calculated?
The calculation of benefits for the spouse of the survivor beneficiary and additional payees is based on the number of creditable years of service the member had at the time of his death. If the member had less than 10 years of service at the time of his death, a benefit of $450 is paid to the spouse of the member, or split between the survivor beneficiary and additional payees based on the designated percentage. Benefits cease upon death of the survivor beneficiary. This means that if the survivor beneficiary dies, any payments to the additional payees would cease. In the event an additional payee dies, the benefit is redistributed among the remaining payees.
Do Former Spouses Receive Survivor Benefits?
Former spouses are often named survivor beneficiaries. For a former spouse to continue receiving money after death of the employee there must be specific provision made by way of a separate, survivorship interest payable to the former spouse upon the death of the member. Otherwise, payments being made to the former spouse simply stop. In order to effectuate this interest, a Survivor Beneficiary Designation form must be properly completed and submitted prior to the member’s death. Additionally, if the Participant is retired he/she will need to have selected a retirement Option that provides a Former Spouse with continuing benefits. This is usually a required term in the parties’ Divorce Decree. If you are a Former Spouse’s attorney, do not forget to include this term in the Decree as it could result in a malpractice claim if you forget.
Want to learn more about the Nevada Public Employees Retirement System? Check out our Nevada PERS FAQ.