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NANCY COCHRAN, Plaintiff, v. ROBERT L. COCHRAN, Defendant
NO. COA08-697
Filed:  21 July  2009
1.                                                                                                       Divorce--equitable distribution--valuation of State Retirement system pension--total
contribution method--Bishop five-step method
The trial court did not err in an equitable distribution case by failing to value defendant
husband’s State Retirement pension based on the total contribution method which uses the total
value of contributions made to the plan by or on behalf of the employee because: (1) our
Supreme Court has held that the State Retirement System pension is a defined benefit plan; and
(2) defined benefit plans should be valued for the purposes of equitable distribution according to
a specific five-step method set out in Bishop, 113 N.C. App. 725 (1994), rather than the total
contribution method.
2.                                                                                                       Divorce--equitable distribution--valuation of State Retirement system pension-
Bishop five-step method
The trial court erred in part an equitable distribution case by its valuation of defendant
husband’s State Retirement system pension using the five-step method under Bishop, 113 N.C.
App. 725 (1994), and the case is remanded for further findings of fact regarding step four
because: (1) in regard to the first step, defendant’s argument that N.C. Gen. Stat. § 135-5(f)
should be used as the basis for calculating his "earliest retirement" date was rejected since the
plain language of the statute allows for the return of accumulated contributions only if the State
employee terminates his service with the State for reasons other than death or retirement; (2) in
regard to the second step determining the employee spouse’s life expectancy as of the date of
separation and use of this figure to ascertain the probable number of months the employee spouse
will receive benefits under the plan, the methodology of plaintiff’s expert, a C.P.A. accredited in
business valuation and a certified valuation expert, was appropriate when the mortality and
interest tables used by the expert were those presently required by the federal government under
ERISA, the use of probable life expectancy was a more accurate predictor of actual life
expectancy than a mere average, and the expert performed the calculations on a year-by-year
basis until there would be no further life expectancy; (3) in regard to the third and fourth steps for
the discount rate used in reducing the pension benefits to present value, the trial court’s order
must be remanded for further findings since it was unclear whether it performed these two steps
that are necessary when defendant’s earliest retirement date post-dated the date of separation; and
(4) in regard to the fifth step requiring the trial court to take into account contingencies such as
involuntary or voluntary employee spouse termination and insolvency of the pension plan,
defendant failed to show how the trial court abused its discretion since defendant pointed to no
evidence suggesting the possibility of any contingencies that could affect the value of defendant’s
pension.
3.                                                                                                       Divorce--equitable distribution--State Retirement system pension--immediate offset
method




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The trial court did not err in an equitable distribution case by using the immediate offset
method in distributing defendant husband’s pension because: (1) the pension benefits did not
represent a disproportionate part of the marital estate when defendant’s pension constituted only
41% of the marital estate; (2) ample assets existed to divide the estate and immediately distribute
the pension; (3) the trial court awarded defendant all of his pension benefits and then awarded
plaintiff a larger portion of the remaining assets as permitted by N.C.G.S. § 50-20.1(a); and (4)
defendant was fully vested and currently eligible for early retirement.
4.                                                                                                    Divorce--equitable distribution--unequal division of divisible property
The trial court did not err in an equitable distribution case by awarding an unequal
division of the divisible property because: (1) the trial court made separate specific findings of
fact that addressed each of the statutory factors under N.C.G.S. § 50-20(c); (2) the fact that
defendant’s pension, when received, will constitute taxable income was not a tax consequence
resulting from the ordered equitable distribution; and (3) in regard to the evidence that plaintiff
would not be taxed on any gain received upon a sale of the marital home, the evidence presented
was merely a speculative tax consequence since there was no evidence that any such sale would
be necessary or was imminent.  In regard to the finding of fact that plaintiff contributed $70,000
of her separate property when the marital home was purchased, the trial court is free on remand
to revisit this issue and determine whether this evidence should be considered as a distributional
factor.
5.                                                                                                    Divorce--equitable distribution--separate checking account--failure to
rebut presumption of marital property
The trial court did not err in an equitable distribution case by classifying a checking
account held in defendant husband’s name only as marital property because defendant failed to
rebut by the greater weight of the evidence the presumption that it was marital property.
Judge WYNN concurring.
Appeal by defendant from order entered  20 December  2007 by
Judge Laura Powell in Rutherford County District Court.    Heard in
the Court of Appeals  27 January  2009.
Taylor & Brown, P.A., by Lee F. Taylor, for plaintiff-
appellee.
Dameron, Burgin, Parker & Jackson, P.A., by Phillip T.
Jackson and Aaron G. Walker, for defendant-appellant.
GEER, Judge.




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Defendant Robert L. Cochran appeals from the trial court's
equitable distribution order. On appeal, Mr. Cochran primarily
contends that the trial court erred in valuing his pension.
According to Mr. Cochran, the trial court failed to follow the
five-step procedure for pension valuation mandated by Bishop v.
Bishop,  113 N.C. App.  725,  440 S.E.2d  591  (1994).    Although we
hold that the trial court complied with certain steps set out in
Bishop, we are unable to determine from the trial court's order
or the record whether it complied with other steps.    We,
therefore, vacate the order and remand for further proceedings.
Facts
Plaintiff  Nancy  Cochran  and  Mr.  Cochran  married  in                  1989,
separated in  2005, and divorced in  2006.    Mr. Cochran worked as a
State  Highway  Patrolman,  and  as  of  the  date  of  separation,  had
participated  in  the  Teachers'  and  State  Employees'  Retirement
System  ("State Retirement System") for  17.1287 years.
Following an equitable distribution hearing, the trial court
entered  an  order  classifying,  valuating,  and  distributing  the
parties' marital estate.   The trial court concluded that an unequal
division was equitable in the case.    Under the order, Ms. Cochran
received  $256,561.00,  including  the  marital  residence  (valued  at
$131,548.69), the divisible property resulting from the increase in
the value of the marital residence  (amounting to  $20,400.00), Mr.
Cochran's 401(k) (valued at $97,385.75), her own 401(k) (valued at
$15,527.10), and various items of personal property.    Mr. Cochran
received                                                                   $241,898.00,  composed  of  his  pension  through  the  State




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Retirement System (valued at $203,324.00), life insurance policies
(valued at $23,775.17), a checking account (containing $3,389.21),
and other items of personal property.   The trial court ordered Ms.
Cochran to pay Mr. Cochran a distributive award in the amount of
$14,663.00.
Subsequently, on 20 December 2007, the trial court entered an
amended equitable distribution order that corrected a "calculation
error"  in  determining  the  amount  of  Mr.  Cochran's  distributive
award and reduced that award to  $7,331.00.    Mr.  Cochran  timely
appealed from the amended equitable distribution order.
Discussion
"A  trial  judge  is  required  to  conduct  a  three-step  analysis
when making an equitable distribution of the marital assets.   These
steps are: (1) to determine which property is marital property, (2)
to calculate the net value of the property, fair market value less
encumbrances,  and  (3)  to  distribute  the  property  in  an  equitable
manner."    Beightol  v.  Beightol,  90  N.C.  App.  58,  63,  367  S.E.2d
347, 350, disc. review denied, 323 N.C. 171, 373 S.E.2d 104 (1988).
On  appeal,  Mr.  Cochran  contends  the  trial  court  erred  (1)  in  its
valuation  of  Mr.  Cochran's  pension,                                       (2)  in  using  the  immediate
offset method to distribute Mr. Cochran's pension, (3) in awarding
an unequal distribution of marital property, and (4) in determining
that a checking account in Mr. Cochran's name was marital property.




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I
[1] Mr. Cochran first argues that the trial court erred by not
valuing his pension based on the total value of contributions made
to the plan by or on behalf of the employee  — a valuation approach
called the "total contribution method."    We disagree.
Generally,  there  are  two  types  of  pension  plans:  defined
contribution plans and defined benefit plans.                              "In  a  defined
benefit plan the employee's pension is determined without reference
to contributions  [by the employee] and is based on factors such as
years of service and compensation received."    Seifert v. Seifert,
82 N.C. App.  329,  333,  346 S.E.2d  504, 506  (1986), aff'd, 319 N.C.
367,  354 S.E.2d  506  (1987).    Conversely,  a  defined contribution
plan is "essentially an annuity funded by periodic contributions"
from the employee, the employer, or both.    Id. at  332,  346 S.E.2d
at  505.
Our  Supreme  Court  has  held  that  the  State  Retirement  System
pension is a defined benefit plan.   Bailey v. State, 348 N.C.  130,
136,  500  S.E.2d  54,  57  (1998)  (classifying  the  State  Retirement
System as part of the mandatory benefit system).    In Bishop, this
Court  held  that  defined  benefit  plans  should  be  valued  for  the
purposes   of    equitable distribution   according   to   a   specific
five-step  method  rather  than  the  "total  contribution  method"




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advocated by Mr. Cochran.                                                  Indeed, this Court has consistently
applied the Bishop method in valuing pension plans for the purposes
of  equitable  distribution.    See,  e.g.,  Cunningham  v.  Cunningham,
171 N.C. App. 550, 615 S.E.2d 675 (2005); Surrette v. Surrette, 114
N.C. App.  368,  442 S.E.2d  123  (1994).    Accordingly, we hold that
the  trial  court  did  not  err  in  declining  to  use  the  total
contribution method in valuing Mr. Cochran's pension.
II
[2] Mr. Cochran next argues that the trial court erred in
its
valuation of his State Retirement System pension by not properly
following the five-step method set out in Bishop.    This Court in
Bishop set out the following requirements for valuing a "defined
benefit" pension plan:
First, the trial court must calculate the
amount                                                                     of    monthly    pension    payment
the employee, assuming he retired on the date
of separation, will be entitled to receive at
the  later  of  the  earliest  retirement  age  or
the date of separation.   This calculation must
be  made  as  of  the  date  of  separation  and
"shall  not  include  contributions,  years  of
service or compensation which may accrue after
the   date   of   separation."                                             N.C.G.S.                              §
50-20(b)(3).     The  calculation  will  however,
include  "gains  and  losses  on  the  prorated
portion  of  the  benefit  vested  at  the  date  of
separation."    Id.  Second,  the  trial  court
must   determine   the   employee-spouse's   life
expectancy  as  of  the  date  of  separation  and
use  this  figure  to  ascertain  the  probable
number  of  months  the  employee-spouse  will
receive benefits under the plan.    Third, the
trial  court,  using  an  acceptable  discount




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rate, must determine the then-present value of
the pension as of the later                                              of    the date of
separation  or  the  earliest  retirement  date.
Fourth,  the  trial  court  must  discount  the
then-present value to the value as of the date
of separation. In  other  words,  determine the
value as of the date of separation of the sum
to  be  paid  at  the  later  of  the  date  of
separation or the earliest retirement date.
This   calculation   requires   mortality   and
interest   discounting.   See                                            [3   William   M.
Troyan,  et  al.,  Valuation  &  Distribution  of
Marital  Property]  §  45.23.  The  mortality  and
interest tables of the Pension                                           Benefit
Guaranty   Corporation,    a corporation   within
the   United                                                             States    Department    of
Labor, are well suited for this purpose.    Id.
Finally, the trial court must reduce                                     the
present  value  to  account  for  contingencies
such                                                                     as                                               involuntary   or   voluntary
employee-spouse termination and insolvency of
the pension plan.    This calculation cannot be
made with reference to any table or chart and
rests within the sound discretion of the trial
court.
Bishop,  113 N.C. App. at  731,  440 S.E.2d at  595-96  (emphasis
added).
A.    First Step
With respect to the first step of Bishop, Mr. Cochran argues
initially  that  the  trial  court  did  not  properly  determine  his
earliest retirement date.                                                This date is critical to subsequent
steps.    The trial court found that "[t]he earliest retirement age
under  the  plan  is                                                     50  years  therefore  the  years  to  earliest
retirement as of the date of separation is  1.97 years."
Mr.  Cochran  contends  that  the  correct  "earliest  retirement"




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date is  60 days from the date of separation or  12 September  2005.
In  making  this  argument,  Mr.  Cochran  points  to  N.C.  Gen.  Stat.  §
135-1(20)                                                                     (2007),  which  defines  "'[r]etirement'   [to]  mean[]  the
termination of employment and the complete separation from active
service with no intent or agreement, express or implied, to return
to service."   Mr. Cochran then argues that under N.C. Gen. Stat.  §
135-5(f),  if  a  member  of  the  pension  plan  ceases  to  be  a  State
employee,  he  or  she  may  receive,  no  sooner  than                       60  days  after
ceasing  to  be  a  State  employee,  his  or  her  contributions  and,  if
vested, the interest accumulated on those contributions.                      M r  .
Cochran  concludes  that  given  the  definition  of  "retirement,"  set
out  in  N.C.  Gen.  Stat.  §  135-1(20),  N.C.  Gen.  Stat.  §  135-5(f),
which  discusses  return  of  contributions  upon  termination  of
employment,  should  be  understood  as  specifying  the  earliest
retirement date.
Mr. Cochran has, however, overlooked the actual language of
N.C. Gen. Stat.  §  135-5(f), which explicitly states:
Should a member cease to be a teacher or State
employee  except  by  death  or  retirement  under
the provisions of this Chapter, he shall upon
submission  of  an  application  be  paid,  not
earlier    than  60                                                           days from the   date o    f
termination of service, his contributions, and
if  he  has  attained  at  least  five  years  of
membership  service  or  if  termination  of  his
membership service is involuntary as certified
by    the   employer,  the  accumulated  regular
interest thereon, provided that he has not in




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the meantime returned to service.
(Emphasis added.)    Thus, the plain language of section  135-5(f)
allows for the return of accumulated contributions only if the
State employee terminates his service with the State for reasons
other than death or retirement.
Accordingly, we reject Mr. Cochran's argument that N.C. Gen.
Stat.  §  135-5(f) should be used as the basis for calculating his
"earliest retirement" date.    The trial court properly determined
Mr. Cochran's earliest retirement date for purposes of valuing
the
State Retirement System pension.
B.    Second Step
Defendant next contends that the trial court violated the
second step's mandate that the trial court "determine the
employee
spouse's life expectancy as of the date of separation and use
this
figure to ascertain the probable number of months the employee
spouse will receive benefits under the plan."                        Bishop,  113
N.C.
App. at  731,  440 S.E.2d at  595-96.    Defendant argues that
"[t]here
is no finding of fact or conclusion of law in the Order in which
the trial court states what it determined 'the employee-spouse's
life expectancy  [to be] as of the date of separation'" or any
"finding of fact or conclusion of law in which the trial court
determined the 'probable number of months the employee-spouse
will receive benefits under the plan' as required by Step  2 of
the Bishop methodology."
At  bottom,  defendant's  arguments  rest  on  a  rather  literal




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reading  of  Bishop.    According  to  defendant,  the  trial  court  must
calculate life expectancy in only one manner such that a specific
finding of fact may be made regarding the likely number of months
that an employee-spouse will receive pension benefits.   We are not
convinced  that  the  Bishop  standard  must  be  so  inflexibly  and
mechanically applied without consideration of the ultimate focus of
the process outlined in Bishop.
The   first                                                                  four steps of   Bishop                               provide a method for
determining a lump sum present value of the stream of payments that
the employee-spouse will likely receive under the pension plan from
the  earliest  date  of  his  retirement  through  his  projected  life
expectancy  (determined  as  of  the  date  of  separation).    The  fifth
step  allows  the  trial  court  to  further  reduce  this  figure  "to
account for                                                                  contingencies  such  as  involuntary  or voluntary
employee-spouse  termination  and  insolvency  of  the  pension  plan."
Id.,  440 S.E.2d at  596.   Thus, only the first four steps relate to
the  present  value  calculation  that  Mr.  Cochran  is  challenging  on
appeal.    This Court summarized, with respect to these four steps,
that "[t]his    calculation                                                  requires   mortality and   i n t e r e s t
discounting.    The  mortality  and  interest  tables  of  the  Pension
Benefit  Guaranty  Corporation,  a  corporation  within  the  United
States Department of Labor, are well suited for this purpose."   Id.
(internal citation omitted).




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For purposes of valuing the State Retirement System pension, the
trial court in this case relied upon the testimony and report of
Ms. Cochran's expert, Foster Shriner, a C.P.A. accredited in
business valuation and a certified valuation analyst.    Mr.
Shriner explained generally in his written report that his method
of valuing the pension "incorporat[ed] those factors relevant to
discount rates and mortality as prescribed by Section  2619 of the
Employers Retirement Security Act of  1974, Section  3(2)  (P.L.  93-
406)  (ERISA), the amendments provided by the Uruguay Round
Agreements Act  (P.L.  103-465)  (GATT) and the Pension Funding
Equity Act of  2004."    In the section of the report setting out
the precise methodology that he used, Mr. Shriner wrote: "To
determine the actuarial present value, a combination of factors
must be employed. First, an appropriate discount rate must be
utilized, and secondly, mortality tables must be incorporated."
Mr. Shriner similarly testified that when faced with a stream of
payments over time, to value it, "you have to have a discount
rate and a mortality table." Thus, Mr. Shriner's methodology
specifically relied upon the two factors identified by this Court
in Bishop as necessary for calculating the value of the pension:
"mortality and interest discounting."Id.Moreover, Mr. Shriner, in
applying the mortalityandinterest discounting, relied upon the
tables currently mandated for use under ERISA in valuing




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pensions.    The "mortality and interest tables of the Pension
Benefit Guaranty Corporation" referenced in Bishop, id., were
adopted for use in connection with ERISA plans.    The tables in
existence as of the date of Bishop have been, as explained by Mr.
Shriner, superceded, for purposes of ERISA pension plan
valuation, by the tables upon whichMr.Shrinerrelied through the
enactment of federal legislation.
We  do  not  believe  that  Bishop  intended  to  preclude  pension
valuers from using updated and more sophisticated tables adopted by
the  Department  of  Labor  for  use  with  ERISA  plans.    Bishop  cannot
mean  that  for  purposes  of  pension  valuation,  North  Carolina  is
frozen in  1994.                                                              Instead, we hold that by approving use of the
Pension  Benefit  Guaranty  Corporation's  mortality  and  interest
tables, the Court pointed pension valuers to the tables being used
for ERISA valuations.
Consistent with Bishop, Mr. Shriner used the tables presently
required by the federal government under ERISA.    In  using  those
tables,  Mr.  Shriner  specifically  determined  Mr.  Cochran's  life
expectancy.                                                                   Although Mr. Cochran contends that the reference to
"life  expectancy"  means  average  life  expectancy  rather  than
"probable life expectancy," as determined in the tables relied upon
by  Mr.  Shriner,  nothing  in  Bishop  precludes  use  of  probable  life
expectancy  —  a  more  accurate  predictor  of  actual  life  expectancy




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than a mere average.   Indeed, the Bishop opinion requires that the
court use the life expectancy to "ascertain the probable number of
months the employee-spouse will receive benefits under the plan."
Id. (emphasis added).                                                        That is precisely what Mr. Shriner did in
using  the  federal  GATT  mortality  table,  called  the  "1994  Group
Reserving Table" or "94 GAR."
Nonetheless, Mr. Cochran urges that, under Bishop, the trial
court  was  required  to  come  up  with  a  specific  number  of  months,
multiply it by the expected benefit, and then discount the overall
amount to determine present value.   Mr. Shriner, however, looked at
each year's pension payments, starting with the earliest retirement
date,   multiplied  those  payments  by  a  mortality  factor                (the
probability  of  life  expectancy  for  that  year),  and  then  reduced
that year's payments to present value with a discounting factor. In
other  words,  Mr.  Shriner  performed  precisely  the  calculations
mandated by Bishop on a year-by-year basis until there would be no
further life expectancy.
Nothing  in  Bishop  precludes  this  approach  as  opposed  to  the
more generalized approach urged by Mr. Cochran.    I n d e e d ,  M r .
Shriner's approach actually resulted in a lower life expectancy and
lower projected stream of payments.    The increase in the value of
the  pension  determined  by  Mr.  Shriner  was  due  to  the  discounting
interest rate used by Mr. Shriner and not his calculation of life




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expectancy.
We  note  that  Mr.  Cochran's  expert  witness,  Ronald  Carland,
agreed  that  the  ERISA  approach,  using  GATT  and  GAR,  is  "an
established incontrovertible way to value a pension plan."   W    e
believe such an approach complies with the intent of this Court in
Bishop, especially in light of the Court's approval of the Pension
Benefit Guaranty Corporation's tables and the opinion's expressed
"belie[f] that consistency in valuation methods is important."1Id.,
440  S.E.2d  at                                                              595.   We,  therefore,  hold  that  the  trial  court
properly  applied  Step  two  of  Bishop  when  adopting  Mr.  Shriner's
methodology.    We  further  hold  that  the  trial  court's  finding  of
fact  setting  out  this  methodology  is  sufficient  to  comply  with
Bishop.
C.    Steps Three and Four
Mr. Cochran next challenges the discount rate used in reducing
the  pension  benefits  to  present  value.    The  trial  court,  relying
upon Mr. Shriner's testimony, adopted the GATT rate of 5.6% as the
appropriate  discount  rate  for  present  value  purposes.    The  court
then, however, based on Mr. Shriner's testimony, reduced that rate
based on the assumption that Mr. Cochran would annually receive a
1
Mr. Cochran's expert witness also confirmed that the GATT rate
and  mortality  tables  were  "more  science  than  art,"  while  his  own
approach was "more art than science."




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2.0% cost of living adjustment  ("COLA"), which resulted in a COLA
adjusted GATT rate of  3.5%.
Mr. Cochran points to the provision in N.C. Gen. Stat.  §  50-
20.1(d) (2007), relating to the award in equitable distribution of
pension and retirement benefits, that "[t]he award shall be based
on  the  vested  and  nonvested  accrued  benefit,  as  provided  by  the
plan  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."                                      (Emphasis added.)    Mr.
Cochran, however, overlooks the next sentence in N.C. Gen. Stat. §
50-20.1(d):  "The  award  shall  include  gains  and  losses  on  the
prorated portion of the benefit vested at the date of separation."
Here, the COLA, which Mr. Shriner determined conservatively to be
2.0%  a  year,  amounts  to  an  increase  in  the  pension  benefit  being
received. The   COLA   is   not   a   contribution   to   the   plan   or
compensation being paid after the date of separation.   I  t    i  s
instead a gain on the benefit vested at the time of separation. The
trial court was, therefore, required to take it into account under
N.C.  Gen.  Stat.  §  50-20.1(d).    See  also  Bishop,  113  N.C.  App.  at
731,                                                                           440  S.E.2d  at            595   (noting  that  calculation  of  amount  of
monthly  payments  to  be  received  in  future  must  include  any  gains
and losses on portion of benefit vested at date of separation). Mr.
Cochran does not make any argument that the court erred in taking




-16
the COLA into account through the discount rate as opposed to using
it in calculating the expected benefits and, therefore, we do not
address that issue.
Step three of Bishop requires that the trial court, using the
discount  rate,  determine  present  value  "of  the  pension  as  of  the
later of the date of separation or the earliest retirement date."
Step  four  then  adds  the  final  step  of  discounting  that  present
value figure "to the value as of the date of separation."    M r  .
Cochran's earliest   retirement                                               date post-dated                                                     the   d a t e
of separation and, therefore, Bishop required that the trial
court  perform  both  Step  three  and  Step  four.    Because  it  is  not
apparent  from  the  trial  court's  order  that  it  did  so,  we  must
remand for further findings of fact.
The  trial  court's  order  finds:  "Using  the  94  Group  Annuity
Reserving Table, which the court finds is an appropriate method of
determining life expectancy[,] the court finds that the actuarial
present  value  of  the  defined  benefit  plan  of  $1,016.12  per  month
beginning  on  the  earliest  retirement  date  of  July                      25,                                                                 2007  is
$215,225."                                                                    This  finding  of  fact  does  not  specifically  state
whether the present value was being determined as of the earliest
retirement date or the date of separation.   Mr. Shriner's testimony
and report, on which this finding of fact is based, suggests that
the                                                                           $215,225  constituted  the  present  value  as  of  the  date  of




-17
separation.   If that was the intended finding of the trial court  —
something as to which we can only speculate — then the trial court
skipped Step three of Bishop and may have calculated an incorrect
value as of the date of separation.    If the finding is really the
trial court's determination as of the date of earliest retirement,
then  the  trial  court  never  found  a  value  as  of  the  date  of
separation.
Because Bishop is controlling, it does not matter whether Mr.
Shriner or other valuation experts would not usually include these
two steps.   While Mr. Shriner was asked by counsel to determine the
present value as of the date of separation, the trial court, under
Bishop,  should  have  determined  it  as  of  the  earliest  retirement
date  —  Step  three  of  Bishop.    Then,  that  figure  would  have to  be
reduced to present value as of the date of separation  — Step four
of Bishop.   Because the trial court did not clearly comply with the
third  and  fourth  steps  of  Bishop,  we  must  remand  for  further
findings  of  fact.    We  leave  to  the  discretion  of  the  trial  court
whether to receive more evidence on this issue.
D.    Step Five
Finally, with respect to the valuation, Mr. Cochran contends
that  the  trial  court  failed  to  follow  Step  five  of  the  Bishop
methodology,  requiring  that  the  trial  court  take  into  account
contingencies  such  as  involuntary  or  voluntary  employee-spouse




-18
termination and insolvency of the pension plan.   Bishop holds that
"[t]his calculation cannot be made with reference to any table or
chart  and  rests  within  the  sound  discretion  of  the  trial  court."
113 N.C. App. at  731,  440 S.E.2d at  596.                                   Mr .  Cochran  must ,
therefore, demonstrate that the trial court abused its discretion
in not reducing the present value based on such contingencies.
Mr.  Cochran,  however,  points  to  no  evidence  in  the  record
suggesting the possibility of any contingencies that could affect
the  value  of  Mr.  Cochran's  pension.    Since  Mr.  Cochran  was  fully
vested                                                                        in    his   pension, the possibility of termination w a s
immaterial.    Further, Mr. Cochran made no showing and has made no
argument that a risk of insolvency exists for the State Retirement
System pension plan.                                                          Accordingly,  Mr.  Cochran  has failed to
demonstrate  that  the  trial  court  abused  its  discretion  in  not
further reducing the pension value to account for contingencies of
the type discussed in Step five of Bishop.
III
[3] Mr. Cochran next contends that the trial court erred in
using the immediate offset method in distributing his pension.
In support of this argument, he relies exclusively on Seifert v.
Seifert,  319 N.C.  367,  354 S.E.2d  506  (1987).                            In Seifert, the
Supreme Court held:
[I]f  the  marital  estate  contains  adequate




-19
property other than the pension and retirement
benefits, an in kind or monetary distribution
of  these  assets  may  be  made  which  takes  into
account the anticipated pension and retirement
benefits.   This is impermissible only when the
value of the pension or retirement benefits is
so    disproportionate  in  relation  to  other
marital    property   that an    i m m e d i a t e
distribution would be inappropriate.
Id. at  370,  354 S.E.2d at  509.    In that case, the Court
determined
that the trial court should on remand, after calculating the
percentage of the pension benefits to which the plaintiff wife
was
entitled, then "order a deferred award of such benefits payable
when defendant-husband actually begins to receive them."    Id. at
372,  354 S.E.2d at  510.
Mr. Cochran contends that the value of the pension, in this
case, was such a disproportionate part of the marital estate that
the trial court erred in immediately distributing it.    This case
does not, however, present the problem present in Seifert, where
the pension benefits represented a disproportionate share of the
marital assets.                                                           In Seifert, the marital estate contained four
assets:  $27,000.00 in home equity,  $15,475.00 in personal
property,
the wife's pension valued at  $43,284.07, and the husband's
pension
valued at  $108,491.60.    Id. at  368,  354 S.E.2d at  507-08.    As a
result, the husband's pension exceeded the value of all other
marital assets combined by more than  $22,000.00.   As a result,
there was no way to equally divide the estate and immediately




-20
distribute the pension.    Id. at  371-72,  354 S.E.2d at  510.    Here,
however, Mr. Cochran's pension constituted only  41% of the
marital estate.    Ample assets existed to divide the estate and
immediately
distribute the pension.
Mr. Cochran, however, argues that the pension benefits
represent over  80% of the marital assets distributed to him and
that the value awarded to him is a contingent one that may never
be
received. He points to the Court of Appeals' observation in
Seifert that
[t]he major disadvantage of the present value
method  is  that  the  employee  spouse  bears  the
risk  of  paying  the  nonemployee  spouse  for
rights  that  may  never  mature.    Additionally,
the  employee  spouse  may  feel  cheated  because
he  or  she  receives  only  an  expectancy  of
benefits  while  the  nonemployee  spouse  gets
present  "real"  assets  such  as  home  equity,
stocks or cash payment.
Seifert,  82 N.C. App. at  336,  346 S.E.2d at  507-08  (internal
citation omitted).
Mr. Cochran overlooks the fact that this portion of the
opinion discussed both the advantages and disadvantages of
allowing
immediate distribution    of a pension.   Although this Court
ultimately                                                                 determined   that the disadvantages outweighed
the
advantages and that deferred distribution was preferrable, id. at
337,  346 S.E.2d at  508, our legislature revisited the issue
subsequent to Seifert and adopted N.C. Gen. Stat.  §  50-20.1(a),




-21
which authorizes the result reached in the order entered in this
case:
(a)   The   award                                                     of    vested
pension,    retirement,    or    other    deferred
compensation benefits may be made payable:
(1)As a lump sum by agreement;
(2)   Over a period of time in fixed
amounts by agreement;
(3)Byappropriate domestic
relations  order  as  a  prorated
portion of the benefits made to
the designated recipient at the
time the party against whom the
award  is  made  actually  begins
to receive the benefits; or
(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.
(Emphasis added.)
The trial court, here, awarded Mr. Cochran all of his
pension
benefits and then awarded Ms. Cochran a larger portion of the
remaining assets,    precisely as    permitted by    the   statute.
Especially since Mr. Cochran is fully vested and, in fact,
currently eligible for early retirement, we cannot conclude that
the trial court erred in making an immediate distribution of the
pension benefits.
IV
[4] Mr. Cochran further contends that the trial court erred




-22
in
awarding an unequal division of the divisible property.    Although
the trial court awarded the parties an equal portion of the
marital
assets, it distributed solely to Ms. Cochran the increase in the
value of the marital home from the date of separation to the date
of distribution.    This divisible property was valued at
$20,400.00.
As  an  initial  matter,  Mr.  Cochran  contends  that  the  trial
court's  findings  of  fact  are  inadequate  because  the  trial  court
simply restated the statutory factors set out in N.C. Gen. Stat.  §
50-20(c)(1),  (3),  (4), and  (11a)  (2007).    In the finding cited by
Mr. Cochran, finding of fact 75, the trial court stated: "The court
considered all of the distributional factors as set out in N.C.G.S.
50-20  and  finds  that  the  factors  listed  below  are  present  and
relevant in this case."   The   court   then  listed  the  statutory
factors identified in N.C. Gen. Stat. § 50-20(c)(1), (3), (4), and
(11a) and added a final one: "The plaintiff contributed $70,000 of
her separate property when the marital home was purchased."
As  this  Court  has  held,  the  trial  court  must  "make  specific
findings of fact regarding each factor specified in N.C. Gen. Stat.
§ 50-20(c) . . . on which the parties offered evidence."   Embler v.
Embler,  159  N.C.  App.  186,  188,  582  S.E.2d  628,  630  (2003).    We
agree  with  Mr.  Cochran  that  finding  of  fact  75,  standing  alone,
would not be sufficient.   See Daetwyler v. Daetwyler, 130 N.C. App.
246,  249-50,  502  S.E.2d  662,  665  (1998)  ("We  note  that  a  finding




-23
which merely states that 'due regard' has been given to the section
50-20(c)  factors,  without  supporting  findings  as  to  the  ultimate
evidence presented on these factors, is insufficient as a matter of
law  because  such  a  general  finding  does  not  present  enough
information  to  allow  an  appellate  court  to  determine  whether
evidence presented on each of the section 50-20(c) factors was duly
considered  by  the  trial  court[.]"  (internal  citations  omitted)),
aff'd per curiam,  350 N.C.  375,  514 S.E.2d  89  (1999).    Finding of
fact  75                                                                      was   not, however,   the   only   finding   regarding   the
distributional  factors  set  out  in  N.C.  Gen.  Stat.                      §                                                              50-20(c).
Instead, the trial court made separate, specific findings of fact
that addressed each of the statutory factors listed in finding of
fact  75  that  the  trial  court  found  "present  and  relevant  in  this
case."
Mr.  Cochran,  however,  further  argues  that  the  trial  court
should have made findings of fact regarding distributional factor
N.C. Gen. Stat.  §  50-20(c)(11), which requires the trial court to
consider  "[t]he  tax  consequences  to  each  party,  including  those
federal and State tax consequences that would have been incurred if
the marital and divisible property had been sold or liquidated on
the   date of    valuation."                                                  The sole evidence regarding    t a x
consequences,  however,  was  elicited  from  Mr.  Cochran's  expert
witness, who testified that if the marital home were sold, the gain




-24
received   in    the   sale would                                              not   be    taxable    u  n  d  e  r
certain circumstances.    He   further   testified   that  Mr.
Cochran's  pension  benefits  would  be  subject  to  taxation  when
received.
This  Court  has,  however,  construed  N.C.  Gen.  Stat.                      §                                      50-
20(c)(11) "as requiring the court to consider tax consequences that
will  result  from  the  distribution  of  property  that  the  court
actually  orders."    Weaver  v.  Weaver,  72  N.C.  App.  409,  416,  324
S.E.2d 915, 920 (1985).   The fact that Mr. Cochran's pension, when
received, will constitute taxable income is not a tax consequence
resulting from the ordered equitable distribution.   See also Smith
v.  Smith,                                                                     111  N.C.  App.                        460,   504,   433  S.E.2d   196,   222   (1993)
("[E]ven when evidence pursuant to [N.C. Gen. Stat. § 50-20(c)(11)]
is  presented,  the  court  is  only  required  to  consider  the  tax
consequences  that  will  result  from  the  distribution  the  court
actually  orders."),  reversed  in  part  on  other  grounds,  336  N.C.
575,  444 S.E.2d  420  (1994).
As for the evidence that Ms. Cochran would not be taxed on any
gain  received  upon  a  sale  of  the  marital  home,  since  there  is  no
evidence that any such sale would be necessary or is imminent, the
evidence presents merely a speculative tax consequence as to which
the trial court may not make a finding of fact.    See, e.g., Dolan
v. Dolan,  148 N.C. App.  256,  258-59,  558 S.E.2d  218,  220  (holding




-25
that trial court erred in making finding as to tax consequences if
parties    sold rental                                                       property   because    consequences    "were
hypothetical  and  speculative"  in  the  absence  of  finding  that
parties would be required to liquidate property), aff'd per curiam,
355 N.C.  484,  562 S.E.2d  422  (2002); Crowder v. Crowder,  147 N.C.
App.  677,  683,  556  S.E.2d  639,  643  (2001)  ("Valuation  of  marital
property  may  include  tax  consequences  from  the  sale  of  an  asset
only  when  the  sale  is  imminent  and  inevitable,  rather  than
hypothetical or speculative.").
Finally,  Mr.  Cochran  argues  that  the  trial  court's  finding
that Ms. Cochran contributed $70,000 of her separate property when
the marital home was purchased is not supported by the evidence. We
agree  that  this  finding,  as  set  out,  is  not  supported  by  the
evidence. The   evidence   indicates   that   Ms.   Cochran   deposited
$125,000.00  of  her  separate  funds  into  the  parties'  joint  bank
account.   Mr.  Cochran  admitted  that  when  the  parties  purchased
their first marital home, the $70,000.00 down payment was obtained
substantially from Ms. Cochran's separate funds.   The parties sold
their  first  home,  and                                                     $65,236.41  of  the  proceeds  were  used  to
purchase  the  marital  home  at  issue  in  the  equitable  distribution
hearing.   This evidence does not support a finding that Ms. Cochran
contributed $70,000.00 of her separate funds to the purchase of the
marital  home  being  distributed  in  the  equitable  distribution




-26
hearing.    The  trial  court  is,  however,  free  on  remand  to  revisit
this issue                                                                    and   determine whether    this evidence   s h o u l d
be considered as a distributional factor.
V
[5] Finally, we consider Mr. Cochran's argument that the trial
court erred by classifying a checking account held in his name only
as marital property.   As of the date of separation, the parties had
two checking accounts: (1) a marital account that had been "divided
equally  between  the  parties  by  stipulation";  and  (2)  an  account
solely in Mr. Cochran's name, used by Mr. Cochran after separation,
with a value of  $3,389.21 at the date of separation.
Under North Carolina law, property acquired "after the date of
marriage"  and  "before  the  date  of  separation"  is  presumed  to  be
marital for the purpose of equitable distribution.   N.C. Gen. Stat.
§ 50-20(b)(1) (2007).   To rebut this presumption, the party seeking
to  classify  the  property  as  separate  must  show,  by  the  greater
weight  of  the  evidence,  that  the  property  is  not  marital  but
separate property, as defined in N.C. Gen. Stat. § 50-20(b)(2). See
N.C. Gen. Stat.  §  50-20(b)(1).
Here, Mr. Cochran asserts that the only funds transferred into
this account were his portion of the funds from the marital joint
account that the parties had by agreement split equally during the
week they separated.   Ms. Cochran, however, presented evidence that




-27
the bank account in question was opened on  9 July  2005, five days
before the parties separated, with an initial deposit of $4,032.55.
Ms. Cochran presented further evidence that the only checks written
from  the  joint  account  to  Mr.  Cochran  were  a  check  dated  7  July
2005  for  $1,000.00  and  a  check  dated  14  July  2005  for  $2,100.00.
Both checks were made out to "cash."   The  14 July  2005 check could
not have been the source of funds in the account, since the account
balance  on  13  June  2005  was  $3,389.21.    Given  this  evidence,  we
hold  that  the  trial  court  did  not  err  in  determining  that  Mr.
Cochran failed to rebut, by the greater weight of the evidence, the
presumption  that  the  checking  account  was  marital  property.
Accordingly,  we  uphold  the  trial  court's  classification  of  the
account.
Affirmed in part; reversed and remanded in part.
Judge ERVIN concurs.
Judge WYNN concurs in a separate opinion.
WYNN, Judge, concurring.
I concur with the majority’s holding vacating the trial
court’s equitable distribution order and remanding for further
proceedings.    However, I write separately to discourage deviation
from the Bishop methodology, absent a high level of scrutiny and




-28
exacting analysis of the type demonstrated in today’s opinion.
In Bishop, this Court reviewed different valuation methods
developed by  “accountants and actuaries and accepted by the
courts”
and thoughtfully crafted a five-step approach for valuating
defined
benefit plans.    Bishop,  113 N.C. App. at  730,  440 S.E.2d at  595.
Specifically, the second step of the  “Bishop method” requires the
trial court to  “determine the employee-spouse's life expectancy
as
of the date of separation and use this figure to ascertain the
probable number of months the employee-spouse will receive
benefits
under the plan.”    Bishop,  113 N.C. App. at  731,  440 S.E.2d at  595
96.
In this case, the trial court made the following finding
regarding the valuation of Mr. Cochran's pension plan:
7. . .                                                                    . The court used the following relevant
factors when determining the valuation of the
plan.  The  Defendant  participant  was  born  on
July                                                                      26,                                                                                             1957  and  his  age  at  the  date  of
                                                                          separation  was                                                                                 48.03  years.  The  Defendant's
                                                                                                                    date  of  employment,  in  regards  to  this  plan,
was   May                                                                 28,                                       1988.                                                 As  of  the  date  of
separation                                                                                                                                                                the   Defendant has   been a
participant in the plan for  17.1287 years and
was  still  employed.  The  earliest  retirement
age  under  the  plan  is  50  years  therefore  the
years to earliest retirement as of the date of
separation                                                                is                                        1.97  years.                                          The
unreduced  monthly  benefit  as  of  the  date  of
separation was  $1,270. The reduced benefit at
earliest retirement is $1016. . .                                         .   Using the
94  Group  Annuity  Reserving  Table,  which  the
court   finds   is   an   appropriate   method   of




-29
determining  life  expectancy  the  court  finds
that   the   actuarial   present   value   of   the
defined  benefit  plan  of                                           $1,016.12  per  month
beginning  on  the  earliest  retirement  date  of
July  25,2007 is  $215,225.  .  .
The evidence presented at trial and the resulting findings of
fact
indicate that, rather than determining a life expectancy and
number
of probable months that Mr. Cochran would receive benefits as
required by Bishop, the trial court adopted the alternative
valuation method presented by Plaintiff's expert, Mr. Shriner.
By
his own admission, Mr. Shriner testified that he did not
determine
a life expectancy for Mr. Cochran that could be expressed as a
number of years.    He explained that, rather than using a static
calculation of  “life expectancy” based on averages, he used
actuarial math to determine the probability of mortality.
Further,
neither the trial court’s findings nor Mr. Shriner’s testimony
offered a probable number of months that Mr. Cochran would
receive
benefits from his pension plan.    Thus, the method used in this
case
was not the specific method approved by Bishop.
Nonetheless, I agree that the method employed by Mr.
Shriner,
adopted by the trial court, and affirmed by our decision today,
was
an alternate method that was consistent with Bishop.    Yet, while




-30
it
does appear to be reasonable not to be  “frozen in  1994[,]” the
method prescribed by Bishop remains valid.    Because  “consistency
in
valuation methods is important,” it would be prudent for our
trial
courts to weigh with great care any efforts to deviate from the
specific method prescribed in Bishop.    Bishop,  113 N.C. App. at
731,  440 S.E.2d at  595.

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