As an attorney for the spouse of a professional athlete, be cautious when the other side claims there is only one retirement plan. A missing retirement plan could result in hundreds of thousands of lost dollars for your client.
By Tim Voit, Financial Analyst
When representing the soon-to-be former spouse of a professional athlete, it’s advisable to request all documentation available regarding the retirement benefits of the athlete spouse, since it is very likely that he or she may be a participant in two or more retirement plans – depending on the leagues in which the athlete played (i.e., minor versus major league, NFL v. MLB), as well as the number of clubs or organizations played for. Missing even a single retirement plan could result in hundreds of thousands of dollars being lost for your client.
Since it is not uncommon for professional athletes to squander their fortune, the attorney for the non-player spouse should consider protecting their client’s share of the retirement benefits – which can be done with a QDRO. Pensions and even 401Ks cannot be squandered like non-retirement monies because of the terms and conditions of the plan, and the distribution restrictions.
Some retirement plans are overlooked or undisclosed because many sports teams have more than one retirement plan. The attorney needs to look at benefits that may have accrued not only while the player is (or was) a professional, but also while they were on a minor league team.
In baseball, given its free agency, the athlete may ultimately have major and minor league benefits upon retirement – and the benefits may be derived from several teams. For example, a player for the Cincinnati Reds would not only have retirement benefits under the Major League Baseball Pension Plan and the Major League Baseball Players Investment Plan – both of which are under the MLB Benefit Plan, and for which all baseball players accrue benefits – but the Cincinnati Reds Retirement Income Plan and the Cincinnati Reds 401(k) plan. If that athlete retires and joins the coaching staff of a baseball team, then he will also participate in the MLB Pension Plan for Non-Uniform Personnel.
The NFL does not have a minor league system in place, but it has several different retirement plans. For example, the Bert Bell–Pete Rozelle NFL Player Retirement Plan, with benefits commencing as early as age 45; the NFL Player Supplemental Disability Plan; and the NFL Second Career Savings Plan, where the NFL matches $2 for every $1 of player contributions. There is also the NFL Annuity Program, a deferred compensation program.
Each sport generally has an association for their officials that may offer retirement plans as well.
As an attorney for the non-player spouse, you may need to dig deeper if the other side suggests that there is only one retirement plan.
Tim Voit is a nationally recognized expert in QDROs and pension valuations in divorce. He is the author of Retirement Benefits & QDROs in Divorce (CCH, 2004), Federal Retirement in Divorce – Strategies & Issues, as well as more than 100 articles and CLE programs.