Retirement Basics for Divorce – Part Two – Intel Plans and related benefits

Intel is one of Oregon’s largest employers and has several different retirement benefits for their employees. Here is a list of the different plans that may exist (depending on hire date and position within the company):

Intel 401(k) Savings Plan: This is a defined contribution retirement account plan all Intel employees should have. Please note that it is SEPARATE from the plan below in #2 and must be divided separately if this is the agreement of the parties or the court order. It can be confusing when someone looks at the Fidelity statement, as there is a “total balance” listed, but you must ascertain the breakdown of the 401k and Retirement Contribution Plan (if listed). Hence, there is a separate cost for Qualified Domestic Relations Order (QDRO) for both the 401k and Retirement Contribution Plan described below. As a family law mediator and collaborative attorney, I try to help families streamline their retirement account and asset allocation to limit costs and QDROs to a minimum if the numbers are able to work out; The average flat rate fee for each QDRO is $600 paid to a pension attorney after the divorce, so this adds up quickly if parties unknowingly write up an agreement to divide multiple retirement accounts in a divorce. I recently helped a family modify an agreement where they had plans to divide 5 different plans, and we helped reduce it to 2, saving the family $1,800 in pension fees alone. This plan also has a new Roth election, so look carefully at the Fidelity statement to determine the percentage (if any) of Roth holdings vs non-Roth tax deferred holdings. One caveat to understand is Fidelity will not approve QDROs where a certain percentage of Roth requested to transfer is different than the non-Roth component – it must be the same percentage for the whole portfolio.
Intel Retirement Contribution Plan (formerly called SERP): This plan is available to some Intel employees depending on hire date and this is another Defined Contribution Plan with a cash balance shown on the Fidelity statement.
Intel Minimum Pension plan; This plan is a defined benefit plan with an option for lump sum payout or monthly benefits and employees can look up an estimate of value through the Fidelity website. It is being phased out and it is my understanding only employees hired before 2011 are guaranteed payout. This is one that is hard to predict future payout so often families decide to divide any future monthly payout to eliminate risk of uncertainty, and this requires a court order called a Qualified Domestic Relations Order (QDRO). I highly recommend working with a family law mediator or collaborative law professional to coordinate this with a pension attorney for a smooth and efficient process.
Intel SERPLUS pension plan: This plan is relatively rare and a non-qualified retirement account reserved for certain executives or highly compensated employees.

Other benefits Intel employees may have that fall outside of retirement, but are investment assets relevant in a divorce proceeding include Unvested Restricted Stock Units (RSUs), Vested RSUs, and stock purchased through Employee Stock Participation Plan (ESPP) twice a year. It’s very important to review the detailed vesting schedule to determine the value of unvested shares vs. vested shares as well as what may be held in ESPP shares through E-trade account.

This is a complex area of the law and important to consult with a family law attorney, mediator with experience in this area, and/or a CPA or CDFA ( Certified Divorce Financial Analyst) to better understand the various options for valuing and dividing both unvested and vested shares. Another component that can be tricky to evaluate is what income should be attributed to the Intel employee for the stock benefits. We often work through these issues in mediation and collaborative divorce method to help each family arrive at a solution that feels fair and equitable to both parties.

Some Intel employees have Health Savings Accounts and it’s possible to transfer or divide this account if needed or offset it with another asset. SERMA retirement health savings accounts also exist for some employees hired pre-2014.

A lot of families choose to offset retirement with other assets such as a house or business. It is important to look at the differences in whether an asset is tax deferred (non-Roth retirement accounts) versus another asset such as cash in a savings account. In mediations and collaborative family law cases, we often go through different scenarios to show the estimated future tax impact on various settlement options to find one that best fits each parties’ long-term goals and to avoid surprises in the tax area.

I highly recommend consulting with an attorney, CPA, or Certified Divorce Financial Analyst (CDFA) with experience in Intel cases to ensure an efficient, fair, and smooth separation or divorce. There are many pitfalls to avoid, information easily missed inadvertently, and it’s costly and stressful to re-open a divorce case after the fact if something wasn’t done properly.