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Why Qualified  Domestic  Relations  Orders  (QDRO's) are an important Legal hoop to jump through

November 27, 2018

Qualified  Domestic  Relations  Orders  

 

SMLXL

 

 

The  process  of  ending  a  marriage  is  never  easy.  The  emotional  roller  coaster  that  a  family  goes  through  is  enough  for  anyone  to  deal  with,  but  through  all  of  that,  the  spouses  are  still  required  to  jump  through  the  legal  hoops  and  ladders  that  comes  with  every  divorce.  Child  support,  alimony,  and  division  of  property  are  common  issues  that  come  to  mind  in  contemplation  of  divorce  but  along  with  those  should  be  what  happens  to  rights  in  more  obscure  property  interests  such  as  retirement  plans.  For  years,  marital  income  is  being  placed  into  various  retirement  plans.  Is  it  not  only  fair  to  get  your  share  at  the  dissolution  of  a  marriage?  Well,  a  Qualified  Domestic  Relations  Order  (QDRO)  allows  you  to  do  just  that.  

 

Now,  what  is  a  Qualified  Domestic  Relations  Order?

 

 Usually  prepared  as  part  of  a  divorce  proceeding,  Qualified  Domestic  Relations  order,  or  QDRO,  awards  an  alternate  payee  the  right  to  the  benefits  of  the  participant  of  a  retirement  plan.  Now,  it  is  important  to  note  that  for  a  domestic  relations  order  to  be  qualified,  it  must  be  accepted  by  the  retirement  plan.  Regardless  of  that  requirement,  it  is  just  as  important  and  binding  as  any  alimony  or  child  support  order.  These  are  usually  plans  that  are  sponsored  by  an  employer  or  private  company.        

 

Be  sure  to  include  these  in  your  order!  

 

A  QDRO  can  contain  a  number  of  terms  that  vary  from  one  order  to  the  next.  However,  each  order  MUST  contain  a  few  provisions.    

  • You  must  ensure  that  the  retirement  plan  owner’s  name  and  address  are  both  listed  in  the  order.  

  • You  must  also  ensure  that  whoever  the  alternate  payee  has  listed  their  name  and  address.  

  • The  correct  retirement  plan  name  

  • Terms  regarding  how  the  payment  is  determined  or  calculated  such  as  percentage,  flat  dollar  amount,  or  a  formula.  

  • The  number  of  payments  in  the  order.  This  could  include  one  lump  sum  payment,  monthly  payments,  or  any  other  agreed  upon  method.  

  • When  the  payments  will  be  made.  

I  need  a  QDRO  drafted,  what  do  I  do?

 

 Well,  first  you  should  be  aware  that  QDROs  are  not  neutral  documents  but  advocating  ones.  There  are  various  division  methods  and  the  construction  of  the  document  could  drastically  effect  any  future  outcomes  on  any  payments  that  may  be  received.  Thus,  it  is  very  important  to  have  a  lawyer  represent  you    during  the  divorce  who  are  familiar  with  retirement  plans  so  that  all  retirement  benefits  and  entitlements  are  addressed  in  the  divorce  and  these  documents  can  

be  properly  drafted  for  you.  It  would  even  benefit  you  to  have  your  representation  draft  the  order  if  possible.  Further,  you  should  not  hesitate  to  begin  this  process.  Try  to  have  the  order  entered  with  the  judgement.  While  it  is  very  helpful  in  the  practical  sense,  it  also  ensures  that  you  don’t  miss  any  payments  or  other  benefits  such  as  survivor  benefits  after  death  down  the  road.  It  is  important  to  note  that  while  a  QDRO  can  be  drafted  well  after  the  judgment  is  made,  you  will  not  receive  any  missed  payments,  only  those  going  forward.    However,  if  that  is  not  possible,  a  lawyer  can  help  with  other  proceedings  to  receive  any  back  payment  of  retirement  plans.  Finally,  be  aware  that  you  can  notify  the  retirement  plan  to  receive  any  necessary  information  that  you  feel  your  spouse  may  be  withholding.  Spouses  as  alternate  payees  have  a  right  to  access  information  in  regards  to  these  benefits.  If  they  are  still  being  difficult,  attorneys  can  require  them  to  provide  necessary  information  via  subpoena  for  court  order.  Department  of  Labor  laws.  

 

The  Employer  sponsored  retirement  plan  provides  an  sample  QDRO,  can’t  I  just  use  that?  

 

Sure  you  can!  Just  remember  what  I  said  earlier  about  these  not  being  neutral  documents.  By  using  these,  the  party  benefiting  the  most  may  not  be  the  plan  spouse  or  the  alternative  payee  spouse  but  the  employer!  QDROs  drafted  by  employers  may  not  adequately  cover  all  available  options  and  may  just  make  their  job  easier  in  accepting  or  denying  the  order.  After  all,  the  difference  between  a  qualified  domestic  relations  order  and  a  regular  domestic  relations  order  is  that  the  former  is  approved  by  the  plan.  However,  what  a  plan  provided  QDRO  does  do  well  is  act  as  a  template  for  your  representation  to  draft  a  QDRO  that  benefits  you.  You  can  gather  what  terminology  and  aspects  of  the  plan  a  provider  wants  to  see  to  keep  any  draft  from  being  rejected.    

 

Qualified  Domestic  Relation  Orders  may  seem  like  another  hoop  to  jump  through  in  this  legal  circus  but  trust  me  when  I  tell  you  that  they  should  not  be  ignored.  With  proper  planning,  drafting,  and  communication,  a  qualified  domestic  relations  order  could  be  good  for  both  the  alternative  payee  spouse  as  well  as  the  benefit  plan  spouse.  A  QDRO  can  keep  one  spouse  from  losing  pension  money  down  the  road  while  it  protects  the  other  from  further  litigation  down  the  road.  While  complicated,  this  can  certainly  streamline  the  divorce  process.  Just  remember  that  the  sooner  you  start  the  process,  the  easier  it  will  be.

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