## Facts

- Robert Henkle and Delsa Henkle were married for six years, from 1969 until their separation in 1975.
- Robert was a career Air Force officer. At the time of marriage, he already had substantial years of military service and retired in 1975 with 32 total years of service.
- Under the applicable military retirement formula, a service member could retire with 50% of base pay after 20 years of service, and the retirement percentage increased by 2.5% per additional year up to a maximum of 75% after 30 years.
- Because the retirement percentage was capped at 30 years, additional service after the 30th year did not increase the percentage of base pay paid as retired pay.
- In the dissolution proceedings, Delsa contended the community interest should be calculated under the time rule as 6/32 (six years of marriage over 32 years of service), with Delsa receiving one-half of that community fraction.
- The trial court accepted Delsa’s 6/32 approach and awarded her a one-half interest in the community share of Robert’s military retired pay.
- Robert appealed the community-property apportionment of his military retirement benefits.

## Issues

1. When a defined-benefit retirement plan reaches a maximum benefit after a fixed number of years, should post-maximum service performed during marriage be counted as “service during marriage” for purposes of applying the time rule to determine the community interest?

## Decision

- The Court of Appeal reversed the trial court’s time-rule calculation to the extent it treated all service during the marriage as pension-earning service despite the plan’s maximum.
- The court held that once the maximum retirement benefit has been earned under a capped plan, later employment—even if it occurs during marriage—does not count as pension-earning “service during marriage” in applying the time rule.
- The court directed that the community fraction be based on (a) the total years of service necessary to earn the pension being paid (here, 30 years to reach the 75% maximum) and (b) only the portion of marital service that occurred before the maximum was reached (here, the years during marriage that contributed to reaching the 30-year cap), rather than the entire six years of marriage and the full 32 years actually worked.

## Legal Principles

- Retirement benefits are a form of deferred compensation and are community property only to the extent they are earned through employment during marriage.
- The “time rule” is commonly used to apportion defined-benefit pensions, but it is appropriate only when the amount of retirement benefits is substantially related to years of service.
- Under the time rule, the community share is based on service performed during marriage in proportion to the total service necessary to earn the retirement benefits being apportioned.
- When a plan caps benefit accrual at a maximum level, service after the employee has earned the maximum benefit is not treated as pension-earning service for community apportionment, even if that post-cap service occurs while the parties are married.
- A time-rule fraction that counts post-cap years as pension-earning service mismeasures what was actually earned during the marital period and can improperly change the community’s share.

## Conclusion

Because Robert’s military pension reached its maximum percentage after 30 years of service, the years he served beyond that point did not increase the pension and could not be treated as pension-earning marital service when applying the time rule; the trial court’s 6/32 calculation was therefore rejected, and the matter was remanded for a recalculation that limits the community fraction to the service required to earn the capped benefit and the marital service that contributed to earning it.


In re Marriage of Henkle, 234 Cal. Rptr. 351 (1987)