Hi Morris,
Thank you for this notification. I would agree that a former spouse, who is
not disabled, should not get favorable tax treatment on such disability
payments. For many Police and Firefighter pensions, if the employee becomes
disabled, the regular retirement benefit can be converted to a disability
pension, with payments commencing prior to the regular retirement age under
the Plan, due to the disability, as well as being tax-free payments to the
disabled employee. Former spouses, under a QDRO, can be assigned a part of
this disability pension, to the extent the disability pension replaced the
original retirement pension earned during the marriage. However, the
tax-advantaged nature of the disability payments should not transfer
through to the former spouse, who is receiving the pension based on a
property interest and not a medical condition, i.e. disability.
Tom
Toxby & Associates, Inc.
355 South Teller Street, Suite 200
Lakewood, CO 80226
Tel: (303) 231-1030
Fax: (303) 231-1033
thomas@xxxxxxxxxxxxxxxxxx
