{"data":{"id":"us-ky/krs-61.690","jurisdiction":"us-ky","citation":"KRS 61.690","heading":"Exemption of retirement allowances -- Taxability after December 31, 1997 -","body":"- Domestic relations orders.\n(1) (a) Except as otherwise provided by this section and KRS 61.705(4), all\nretirement allowances and other benefits accrued or accruing t o any person\nunder the provisions of KRS 61.510 to 61.705, 16.505 to 16.652, and 78.510\nto 78.852, and the accumulated account balance and cash securities in the\nfunds created under KRS 61.510 to 61.705, 16.505 to 16.652, and 78.510 to\n78.852, are hereby exempt from any state, county, or municipal tax, and shall\nnot be subject to execution, attachment, garnishment, or any other process,\nand shall not be assigned.\n(b) A recipient or their legal representative may direct that the recipient's\nretirement benefi ts be paid to a trust that permits the recipient unrestricted\naccess to the amounts held in the trust or if the trust is for the sole benefit of\nthe recipient. The recipient's direction is not an assignment or transfer of\nbenefits.\n(2) Notwithstanding the provisions of subsection (1) of this section, retirement benefits\naccrued or accruing to any person under the provisions of KRS 61.510 to 61.705,\n16.505 to 16.652, and 78.510 to 78.852 on or after January 1, 1998, shall be subject\nto the tax imposed by KRS  141.020, to the extent provided in KRS 141.010 and\n141.0215.\n(3) Qualified domestic relations orders issued by a court or administrative agency shall\nbe honored by the retirement system if:\n(a) The benefits payable pursuant to the order meet the requireme nts of a\nqualified domestic relations order as provided by 26 U.S.C. sec. 414(p). The\nretirement system shall follow applicable provisions of 26 U.S.C. sec. 414(p)\nin administering qualified domestic relations orders;\n(b) The order meets the requirements established by the retirement system and by\nsubsections (3) to (11) of this section. The board of trustees of the retirement\nsystem shall establish the requirements, procedures, and forms necessary for\nthe administration of qualified domestic relations orde rs by promulgation of\nadministrative regulations in accordance with KRS Chapter 13A; and\n(c) The order is on the form established by the retirement system pursuant to the\nretirement system's authority provided under paragraph (3)(b) of this\nsubsection.\n(4) A qualified domestic relations order shall not:\n(a) Require the retirement system to take any action not authorized under state or\nfederal law;\n(b) Require the retirement system to provid e any benefit, allowance, or other\npayment not authorized under state or federal law;\n(c) Grant or be construed to grant the alternate payee any separate right, title, or\ninterest in or to any retirement benefit other than to receive payments from the\nparticipant's account in accordance with the administrative regulations\npromulgated by the retirement system and as provided by subsections (3) to\n(11) of this section; or\n(d) Grant any separate interest to any person other than the participant.\n(5) Any qualif ied domestic relations order submitted to the retirement system shall\nspecify the dollar amount or percentage amount of the participant's benefit to be\npaid to the alternate payee. In calculating the amount to be paid to the alternate\npayee, the court or a dministrative agency that is responsible for issuing the order\nshall follow the requirements set forth in the administrative regulations promulgated\nby the board of trustees. Notwithstanding any other statute to the contrary, the\nboard shall not be require d to honor a qualified domestic relations order that does\nnot follow the requirements set forth in the administrative regulations promulgated\nby the board of trustees.\n(6) If the qualified domestic relations order meets the requirements established by the\nsystem and by subsections (3) to (11) of this section, payments to the alternate\npayee shall begin under the following conditions:\n(a) If the participant is retired and is receiving a monthly retirement allowance,\nthe month following the date the retiremen t system receives a qualified\ndomestic relations order that complies with the administrative regulations\npromulgated by the retirement system and subsections (3) to (11) of this\nsection; or\n(b) If the participant is not retired, the month of the participan t's effective\nretirement date in which the first retirement allowance is payable to the\nparticipant or the month in which the participant receives a refund of his or\nher accumulated account balance as provided by KRS 61.625.\n(7) An alternate payee's benefi ts and rights under a qualified domestic relations order\nshall terminate upon the earlier of:\n(a) The death of the participant;\n(b) The death of the alternate payee; or\n(c) The termination of the participant's benefits under any of the provisions of\nKRS 16.505 to 16.652, 61.510 to 61.705, and 78.510 to 78.852.\n(8) An alternate payee shall not receive a monthly payment under a qualified domestic\nrelations order if the participant is not receiving a monthly retirement allowance.\n(9) The cost of living adjustment provided to the participant pursuant to KRS 61.691 or\n78.5518 shall be divided between the participant and alternate payee in a qualified\ndomestic relations order as follows:\n(a) If the order specifies the alternate payee is to receive a percentage of the\nparticipant's benefit, then the cost of living adjustment shall be divided\nbetween the participant and the alternate payee based upon the percentage of\nthe total benefit each is receiving upon the participant's retirement or upon the\ndate the order is approved by the retirement system, whichever is later; or\n(b) If the order specifies that the alternate payee is to receive a set dollar amount\nof the participant's benefit, then the order shall specify that:\n1. The cost of living adjustment shall be divid ed between the participant\nand the alternate payee based upon the percentage of the total benefit\neach is receiving upon the participant's retirement or upon the date the\norder is approved by the retirement system, whichever is later; or\n2. The alternate payee shall receive no cost of living adjustment.\nIf the order does not specify the division of the cost of living adjustment as\nrequired by this paragraph, then no cost of living adjustment shall be payable\nto the alternate payee. If no cost of living adj ustment is provided to the\nalternate payee, then the participant shall receive the full cost of living\nadjustment he or she would have received if the order had not been applied to\nthe participant's account.\n(10) Except in cases involving child support pay ments, the retirement system may\ncharge reasonable and necessary fees and expenses to the recipient and the alternate\npayee of a qualified domestic relations order for the administration of the qualified\ndomestic relations order by the retirement system. A ll fees and expenses shall be\nestablished by administrative regulations promulgated by the board of trustees of\nthe retirement system. The qualified domestic relations order shall specify whether\nthe fees and expenses provided by this subsection shall be paid:\n(a) Solely by the participant;\n(b) Solely by the alternate payee; or\n(c) Equally shared by the participant and alternate payee.\n(11) The retirement system shall honor a qualified domestic relations order issued prior\nto July 15, 2010, if:\n(a) The order was on file and approved by the retirement system prior to July 15,\n2010. All benefits, including cost of living adjustments payable to the\nalternate payee, for orders that meet the requirements of this paragraph shall\nnot be eliminated or reduced as a r esult of the provisions of subsections (3) to\n(10) of this section and KRS 61.510(27) and 78.510(26); or\n(b) The order or an amended version of the order meets the requirements\nestablished by this section and the administrative regulations promulgated by\nthe retirement system. The order shall not apply to benefit payments issued by\nthe retirement system prior to the date the order was approved by the\nretirement system.","path":["KRS Chapter 61"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57212","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:16Z","sha256":"c54e2f7b0c64225ab9d3ab95bd93c9a357d4e8d9f29e532a5cd3162fd2f20b4e","source_id":"us-ky","stale":false,"prev":"us-ky/krs-61.685","next":"us-ky/krs-61.691"},"notice":"GroundRules: Original legal text. Not legal advice."}