Bill Summary – FastDemocracy

H.B. 469
                          GENERAL ASSEMBLY OF NORTH CAROLINA
                                                                                              Mar 26, 2019
                                      SESSION 2019                                      HOUSE PRINCIPAL CLERK
     H                                                                                                 D
                                    HOUSE BILL DRH40220-LU-75
     Short Title:   Amend Equitable Distribution Laws.                                           (Public)
     Sponsors:      Representative Stevens.
     Referred to:
                                      A BILL TO BE ENTITLED
 AN ACT TO AMEND THE LAWS PERTAINING TO EQUITABLE DISTRIBUTION.
 The General Assembly of North Carolina enacts:
             SECTION 1. G.S. 50-20.1 reads as rewritten:
 "§ 50-20.1. Pension and retirement Pension, retirement, and deferred compensation
             benefits.
     (a)     The award distribution of vested marital pension, retirement, or other deferred
 compensation benefits may be made payable:payable by any of the following means:
             (1)     As a lump sum by agreement;from the plan, program, system, or fund for
                     those benefits subject to subdivision (d)(2) of this section.
             (2)     Over a period of time in fixed amounts by agreement;from the plan, program,
                     system, or fund for those benefits subject to subdivision (d)(2) of this section.
             (3)     By appropriate domestic relations order as As a prorated portion of the
                     benefits made to the designated recipient (i) at the time the party against whom
                     the award is made participant-spouse is eligible to receive the benefits, (ii) at
                     the time the participant-spouse actually begins to receive the benefits;
                     orbenefits, or (iii) at the participant-spouse's earliest retirement age, if
                     permitted by the plan, program, system, or fund. For purposes of this section,
                     "participant-spouse" means the spouse who is a participant in the plan,
                     program, system, or fund.
             (4)     By awarding a larger portion of other assets to the party not receiving the
                     benefits and a smaller share of other assets to the party entitled to receive the
                     benefits.
             (5)     As a lump sum, or over a period of time in fixed amounts, by agreement.
     (b)     The award distribution of nonvested marital pension, retirement, or other deferred
 compensation benefits may be made payable:payable by any of the following means:
             (1)     As a lump sum by agreement;agreement.
             (2)     Over a period of time in fixed amounts by agreement; oragreement.
             (3)     By appropriate domestic relations order as As a prorated portion of the
                     benefits made to the designated recipient (i) at the time the party against whom
                     the award is made participant-spouse is eligible to receive the benefits, (ii) at
                     the time the participant-spouse actually begins to receive the benefits.benefits,
                     or (iii) at the participant-spouse's earliest retirement age, if permitted by the
                     plan, program, system, or fund.
     (c)     Notwithstanding the provisions of subsections (a) and (b) of this section, the court
 shall not require the administrator of the fund or plan plan, program, system, or fund involved to
                                    *DRH40220-LU-75*
     General Assembly Of North Carolina                                                      Session 2019
 make any payments until the party against whom the award is made actually begins to receive
 the benefits unless the plan permits an earlier distribution.or distributions to the nonparticipant
 spouse, except as permitted by the terms of the plan, program, system, or fund.
     (d)      The award When the amount of the benefit payable by the plan, program, system, or
 fund to the participant-spouse is determined in whole or part by the length of time of the
 participant-spouse's employment, the marital portion shall be determined using the proportion of
 time the marriage existed (up to the date of separation of the parties), parties) simultaneously
 with the total time of the employment which earned the vested and nonvested pension, retirement,
 or deferred compensation benefit, benefit subject to equitable distribution, to the total amount of
 time of employment. employment, which earned the benefit subject to equitable distribution. The
 award determination shall be based on the vested and nonvested accrued benefit, as provided by
 the plan or plan, program, system, or fund, calculated as of the date of separation, and shall not
 include contributions, years of service, or compensation which may accrue after the date of
 separation. The award shall include gains and losses on the prorated portion of the benefit vested
 at the date of separation.separation and cost of living adjustments and similar enhancements to
 the participant's benefit. Notwithstanding G.S. 50-20 or G.S. 50-21, if the court makes the award
 payable pursuant to subdivision (a)(3) or (b)(3) of this section and the court divides the marital
 portion of the benefit equally between the participant-spouse and nonparticipant spouse, the court
 shall not be required to determine the total value of the marital benefits before classifying and
 distributing the benefits. However, neither party shall be prohibited from presenting evidence of
 the total value of any marital benefits or of any benefits that are separate property of either spouse.
 When a pension, retirement, or deferred compensation plan, program, system or fund, or an
 applicable statute, limits or restricts the amount of the benefit subject to equitable distribution by
 a state court, the award shall be determined using the proportion of time the marriage existed (up
 to the date of separation of the parties) simultaneously with the total time of the employment
 which earned the benefit subject to equitable distribution to the total time of employment, as
 limited or restricted by the plan, program, system, fund, or statute that earned the benefit subject
 to equitable distribution.
     (d1) When the amount of the benefit payable by the plan, program, system, or fund is not
 determined in whole or part by the length of time of the participant-spouse's employment, but is
 instead based on contributions and held in one or more accounts with readily determinable
 balances, including, but not limited to, individual retirement accounts and defined contribution
 plans, such as those within the definitions of Internal Revenue Code Sections 401(k), 403(b),
 408, 408A, or 457, the court shall not determine the award using the fraction described in
 subsection (d) of this section. The court instead shall determine the marital portion of the benefit
 by determining the amount of the account balance that is due to contributions made or earned
 during the marriage and before separation, together with the income, gains, losses, appreciation,
 and depreciation accrued on those contributions. If sufficient evidence is not presented to the
 court to allow the court to make this determination, the court shall then determine the marital
 portion of the benefit by using the fraction described in subsection (d) of this section, namely, by
 using the proportion of time the marriage existed (up to the date of separation of the parties)
 simultaneously with the employment which earned the benefit subject to equitable distribution
 to the total amount of time of employment. In either event, the award shall be based on the vested
 and nonvested accrued benefit as of the date of separation, together with the income, gains,
 losses, appreciation, and depreciation accrued after the date of separation on the
 date-of-separation benefits. However, the award shall not include contributions that may accrue
 or be made after the date of separation, or any income, gains, losses, appreciation, and
 depreciation accrued on those contributions.
     (e)      No award shall exceed fifty percent (50%) of the benefits the person against whom
 the award is made is entitled to receive as vested and nonvested pension, retirement, or other
 deferred compensation benefits, except that an award may exceed fifty percent (50%) if (i) other
     Page 2                                                                            DRH40220-LU-75
     General Assembly Of North Carolina                                                     Session 2019
 assets subject to equitable distribution are insufficient; or (ii) there is difficulty in distributing
 any asset or any interest in a business, corporation, or profession; or (iii) it is economically
 desirable for one party to retain an asset or interest that is intact and free from any claim or
 interference by the other party; or (iv) more than one pension or retirement system or deferred
 compensation plan plan, program, system, or fund is involved, but the benefits award may not
 exceed fifty percent (50%) of the total benefits of all the plans added together; or (v) both parties
 consent. In no event shall an award exceed fifty percent (50%) if a plan plan, program, system,
 or fund prohibits an award in excess of fifty percent (50%).
      (f)     In the event the person receiving the award dies, the unpaid balance, if any, of the
 award shall pass to the beneficiaries of the recipient by will, if any, or by intestate succession, or
 by beneficiary designation with the plan plan, program, system, or fund consistent with the terms
 of the plan plan, program, system, or fund unless the plan plan, program, system, or fund prohibits
 such designation. In the event the person against whom the award is made dies, the award to the
 recipient shall remain payable to the extent permitted by the pension or retirement system or
 deferred compensation plan plan, program, system, or fund involved.
      (f1)    Whenever the award is made payable pursuant to subdivision (a)(3) or (b)(3) of this
 section, and the pension or retirement or deferred compensation plan, program, system, or fund
 permits the use of a "separate interest" approach in the order, there shall be a presumption,
 rebuttable by the greater weight of the evidence, that the "separate interest" approach shall be
 used to divide the benefit in question. For purposes of this section, the phrase "separate interest"
 approach means any method of dividing pension or retirement system or deferred compensation
 benefits in which the nonparticipant spouse, the spouse not a participant in the plan, program,
 system, or fund in question, receives an interest that allows the nonparticipant spouse to receive
 benefits in a manner independent, in whole or part, of the benefits received by the participant
 spouse, or to make elections concerning the receipt of benefits independently of the elections
 made by the participant spouse.
      (f2)    Whenever the pension or retirement or deferred compensation benefit is distributed
 pursuant to subdivision (a)(3) or (b)(3) of this section in an order that does not employ the
 "separate interest" approach, the court may, considering the length of the marriage and the ages
 of the parties, (i) award all or a portion of a survivor annuity to the nonparticipant spouse or
 former spouse and (ii) allocate the cost of providing the survivor annuity between the parties.
 The survivor annuity awarded by the court, if any, shall be allocated in accordance with the terms
 of the retirement plan, program, system, or fund.
      (f3)    Whenever the pension or retirement or deferred compensation plan, program, system,
 or fund does not automatically provide pre-retirement survivor annuity protection for the
 nonparticipant spouse, the court shall order pre-retirement survivor annuity protection for the
 nonparticipant spouse if permitted by the plan, program, system, or fund.
      (f4)    The court may allocate equally between the parties any fees assessed by a plan,
 program, system, or fund in order to process any domestic relations order or qualified domestic
 relations order.
      (g)     The court may require distribution of the award by means of a qualified domestic
 relations order, or as defined in section 414(p) of the Internal Revenue Code of 1986, or by
 domestic relations order or other appropriate order. To facilitate the calculating and payment of
 distributive awards, the administrator of the plan, program, system, plan, or fund may be ordered
 to certify the total contributions, years of service, and pension, retirement, or other deferred
 compensation benefits payable.
      (h)     This section and G.S. 50-21 shall apply to all vested and nonvested pension,
 retirement, and other deferred compensation plans and plans, programs, systems, or funds,
 including vested and nonvested military pensions eligible under the federal Uniform Services
 Former Spouses Protection Act, and including funds administered by the State pursuant to
 Articles 84 through 88 of Chapter 58 and Chapters 120, 127A, 128, 135, 143, 143B, and 147 of
     DRH40220-LU-75                                                                                Page 3
     General Assembly Of North Carolina                                                    Session 2019
 the General Statutes, to the extent of a member's accrued benefit at the date of separation, as
 determined by the court.including, but not limited to, uniformed services retirement programs,
 federal government plans, State government plans, local government plans, Railroad Retirement
 Act pensions, executive benefit plans, church plans, charitable organization plans, individual
 retirement accounts within the definitions of Internal Revenue Code Sections 408 and 408A, and
 accounts within the definitions of Internal Revenue Code Sections 403(b), 401(k), or 457.
      (i)    If a plan, program, system, or fund deems unacceptable an order providing for a
 distribution of pension, retirement, or deferred compensation benefits, then the court may upon
 motion of a party enter a subsequent order clarifying or correcting its prior order, as may be
 necessary to comply with the specific technical requirements of the plan, program, system, or
 fund.
      (j)    Notwithstanding any other provision of this Chapter, a claim may be filed, either as a
 separate civil action or as a motion in the cause in an action brought pursuant to this Chapter, for
 an order effectuating the distribution of pension, retirement, or deferred compensation benefits
 provided for in a valid written agreement, as defined in G.S. 50-20(d), whether or not a claim for
 equitable distribution has been filed or adjudicated. The court may enter an order effectuating the
 distribution provided for in the valid written agreement."
             SECTION 2. This act becomes effective October 1, 2019, and applies to
 distributions on or after that date.
     Page 4                                                                          DRH40220-LU-75
Statutes affected: 
Filed: 50-20.1
Edition 1: 50-20.1
Edition 2: 50-20.1
Edition 3: 50-20.1, 1-597, 7B-200, 150B-1
Edition 4: 50-20.1, 135-9, 128-31, 1-597, 7B-200, 150B-1
Edition 5: 50-20.1, 135-9, 128-31, 1-597
Ratified: 50-20.1, 135-9, 128-31, 1-597
SL 2019-172: 50-20.1, 135-9, 128-31, 1-597