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Ruggles v. Ruggles8/16/1993
Opinion
We granted certiorari in these cases, and consolidated them for decision, to revisit a subject of recurring concern in our case law: the proper treatment, in a proceeding to dissolve a marriage, of the spouses' community property interest in an employer-sponsored retirement plan. We deem this subject to involve an issue of substantial public interest, as contemplated by NMSA 1978, Section 34-5-14(B)(4) (Repl.Pamp.1990) (conferring certiorari jurisdiction on Supreme Court in cases involving issues of substantial public interest). This Court discussed the subject most recently in , in which we said (in what we shall see below was essentially dictum): " pon dissolution of marriage, unless both parties agree otherwise, the trial court must divide community property retirement benefits on a 'pay as it comes in' basis." (emphasis added).
In the cases now under review, our Court of Appeals, in two 2-to-1 opinions by different panels, faithfully followed the Schweitzer "pay as it comes in" rule and held in effect that a nonemployee spouse is entitled, on dissolution of the marriage, to no monetary benefits representing his or her community interest in a retirement plan when the employee spouse has not yet retired. The nonemployee spouse's only entitlement on dissolution, the Court of Appeals held, is to an order that he or she will eventually, when the employee spouse actually retires and begins to receive payment of the pension provided for under the plan, receive payments of his or her share as they "come in." This is true even though the employee spouse's interest at the time of dissolution is, as it was in Ruggles, fully vested and matured. ); . As phrased by Judge Apodaca for the Ruggles majority, " n New Mexico, unless the parties agree otherwise, the trial court must reserve jurisdiction and divide any retirement benefits on a 'pay as it comes in' basis."
We now withdraw Schweitzer 's rigid "pay as it comes in" mandate and return to the more flexible pre- Schweitzer formulations that permitted a trial court to award to a nonemployee spouse in a marital dissolution all or a portion of his or her community interest in a retirement plan. We hold that the preferred method of dealing with these community assets is to treat them as all other community assets are treated on dissolution -- namely, to value, divide, and distribute them (or other assets with equivalent value) to the divorcing spouses. We realize that in some cases, given the innumerable variations in pension plans and the infinite variety in the circumstances of individual divorcing couples, it will not be possible or practicable to achieve this preferred method of distribution and that other methods, including the "reserved jurisdiction"
or "pay as it comes in" method, will have to be utilized. In cases such as the two before us, in which the employee spouse's interest is vested and matured, the desirability and feasibility of an immediate distribution to the nonemployee spouse are at their zenith. Consequently, we hold that in such cases the trial court should adopt as its first priority the making of a "lump sum" or other equivalent distribution to the nonemployee spouse. The Court of Appeals having ruled otherwise in these cases, its decisions are reversed and each case is remanded to the respective trial court for further proceedings consistent with this opinion.
I. FACTS AND ISSUES
The facts in the cases are relatively straightforward, although in Ruggles the parties executed a marital settlement agreement that
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