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Ryan v. Ryan

Decided: June 1, 1992.

GLORIA RYAN, PLAINTIFF,
v.
JOHN TAYLOR RYAN, DEFENDANT



Moses, J.s.c.

Moses

Taylor Ryan asks the court to declare the pre-retirement benefits package he received from his employer, after the divorce complaint was filed, not subject to equitable distribution.

The parties were married on May 9, 1970. Mr. Ryan had been employed by IBM since 1965 and both parties were employed by IBM at the time of the marriage. In 1973, Mrs. Ryan stopped working to raise their child.

She filed a complaint for divorce on July 11, 1989. The parties appeared in court on February 25, 1992 for trial. Mr. Ryan says that is when he learned, for the first time, that Mrs. Ryan was seeking equitable distribution of three types of payments he had received from IBM on December 31, 1991, pursuant to a pre-retirement program. He asserts that because these payments were received over two and one half years after the complaint was filed, the money is not subject to equitable distribution. The three types of payments are severance pay, vacation pay and commissions.

I. SEVERANCE PAY

IBM's pre-retirement program provides for a severance payment equal to one weeks pay for each six months of service with the company up to a maximum of fifty-two weeks. The program offers an attractive financial inducement to leave the company and was designed by IBM to reduce its overall work force. The payments were to assist employees, who chose to participate in the program, in making the transition into a new career or retirement.

Mr. Ryan was eligible for the pre-retirement program because his skills were in an excess category. For five years from the date of the leave, he will continue to accrue service and earnings credits towards future retirement benefits. Mr. Ryan received a severance payment of $62,238.41, net, based on his regular salary and years of service as of the day he left active employment.

Mrs. Ryan contends that the husband's pre-retirement severance pay is turning an asset, 20 years of service with IBM, into money, which should be subject to equitable distribution. She asserts that, whatever the label, "retirement program", "preretirement program" or "leave of absence payment", the sum represents an employment benefit and should be distributed. She contends that the "Pre-Retirement Program" is, in reality, a retirement program because it requires an irrevocable commitment to retire at the end of the leave of absence (PRP Question 83) and is subject to the Employee Retirement Income Security Act (ERISA). She points out that the program is voluntary (PRP Questions 8 and 87), while severance pay, is not. In addition, she notes that Mr. Ryan received a greater than the normal separation allowance, by his participation in the program, because of his many years of service. (PRP Question 42).

Mr. Ryan argues that his particular program is distinguishable from both retirement and pension plans. It is not a retirement plan because it occurred prior to retirement and does

not affect his future right to retirement compensation. It is distinguishable from a pension plan because a pension is a form of deferred compensation. This severance pay is not deferred compensation, but is payment for waiving his right to receive future salary and employment from IBM. He argues that the fact that he would have to repay the severance in the event that he is rehired by IBM negates its inclusion in equitable distribution. He claims that if the payment was made to compensate past services, it would not have to be repaid.

There is no case law in New Jersey specifically dealing with the question of inclusion of post-complaint severance ...


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