***NOTE***
The plan document dictates when a participant may receive a distribution
and in what form. Some distribution forms are required by law while others
are elective.
When should a QDRO be drafted?
Start this process early because it can take several weeks to get all of
the information. The earlier you have the information from the plan administrator,
the quicker you can start working on an agreement with the other party
or prepare for your trial on the how to divide the retirement benefits.
The ideal situation would be to have the court sign the QDRO at the same
time the divorce decree is entered. If the divorce has already occurred,
it is important to begin and complete this process as soon as possible.
If you do not have a QDRO, you will not receive retirement benefits directly
from the plan.
When will an Alternate Payee get benefits assigned by a QDRO?
In general, the alternate payee cannot receive any payment before the date
when the plan participant could begin to receive benefits from the retirement
plan. The plan's terms will determine the earliest date that the plan
participant can receive benefits.
If it's part of a divorce, won't the Judge automatically do a QDRO?
No. The judge's duty is to divide the marital property according to
the law. If you need a special order to actually make the division happen,
you need to draft and submit the order for the judge's approval and
signature. Every retirement plan has different rules and requirements,
so a judge cannot know what will work for your plan. You are responsible
for submitting the required forms to the plan administrator. The court
does not file these forms for you. If you do not have a QDRO, you will
not receive retirement benefits directly from the plan.
Will the Judge grant my divorce or dissolution without a QDRO?
It depends. In most divorce cases, the issue of whether one spouse or the
other is a participant in a retirement plan will be part of the divorce
proceeding. Some judges don't discuss the issue, while others will
not sign your divorce or dissolution paperwork until you have submitted
a QDRO. It is up to you to make sure you bring up the QDRO issue if the
judge doesn't. It is very important that you take care of the QDRO
requirements before your court case ends. If you do not have a QDRO, you
will not receive retirement benefits directly from the plan.
Do QDROs affect health plan benefits?
A QDRO is used to divide benefits payable under a retirement plan and does
not directly cause changes in health plan benefits. Health benefits available
to you and your family are determined by the terms and conditions of the
medical insurance plan or group health plan. Divorce will almost certainly
affect the health benefits available to the ex-spouse after the divorce
is final. Health benefits for the dependents of the ex-spouse still covered
by a health play may continue to be available; health benefits for the
ex-spouse under the former spouse's health plan may be available for
a limited time after the divorce. Given the high cost of health care,
it is very important to learn what health care benefits are available
after the divorce.
Sometimes a plan may provide for health benefits after retirement such
as for state government retirees who are in PERS Tier I and Tier II groups.
If the alternate payee gets even a nominal portion of the retirement (like
$1 per month) in the divorce or dissolution, they qualify to purchase
health insurance through the PERS plan.
Be sure to learn about all of the benefits that may be available to you
as early as possible in a divorce case requires spouses to sign release
forms for each other to find out all information about bank accounts,
retirement plans, health plans, etc. This disclosure requirement does
not exist in a dissolution case. Instead, each spouse must voluntarily
give this release.
Do military persons need a QDRO?
You need an order with specific language in your divorce or dissolution
final papers to divide military retirement pay, but it is not called a
QDRO. Federal law gives state courts the authority to treat military retired
pay as marital property and divide it between the spouses in the final
divorce or dissolution order. The divorce order needs to specify either
a dollar amount or a percentage of disposable retired pay that is awarded
to the ex-spouse. You can read more about military retirement benefits
and divorce.
What should the ex-spouse of a military person do to receive the court-ordered
military retirement pay?
The ex-spouse can be paid either directly by the Defense Finance and Accounting
Service (DFAS) or directly by the military member depending on how many
years the marriage lasted and how many years the military member served
in active duty.
If you were married for at least 10 years during which the military member
performed at least 10 years of active duty service, the ex-spouse can receive
direct payments from the Defense Finance and Accounting Service (DFAS). Within
90 days after the court issues an order, the ex-spouse needs to submit
a copy of the certified court order to DFAS, along with a completed Application
for Former Spouse Payments from Retired Pay,
DD Form 2293. Instructions for completing and mailing are found on the back of the
DD Form 2293.
If you weren't married for at least 10 years during which the military
member performed at least 10 years of active duty service, you can still
get a percentage of the military retirement pay if the court orders it.
The payments will have to come directly from the service member, however,
and will not come directly from DFAS.
If possible, talk with your local legal assistance office BEFORE you go
to your divorce or dissolution hearing about military retirement benefits.
You can read more about military
retirement benefits and divorce.
Do federal government employees need QDROs to divide federal retirement benefits?
You need a special order to divide federal retirement benefits, but it
is not called a QDRO. To divide a federal retirement plan, the federal
Office of Personnel Management recognizes a division order known as a
Court Order Acceptable for Processing (COAP). A COAP can divide federal
retirement benefits and award survivor benefits. You can read more about
court-ordered
division of federal retirement benefits.
Do state government employees need QDROs to divide state PERS benefits?
Yes. QDROs are needed if the benefits are to be divided in a divorce or
dissolution. One QDRO is needed for each benefit that is being split.
For example, if you have a PERS account, an SBS-AP account, and a Deferred
Compensation Plan, you need a QDRO for each account so you would need
3 QDROs in that case. Each QDRO would authorize the state Division of
Retirement and Benefits to make payments to both the participant and to
the former spouse. You can read more about division of state retirement
accounts. Please read the Qualified Domestic Relations Order Divorce and
Dissolution Information Packet on our website for our QDRO order forms
and more information about the federal and state requirements after a
divorce, changes to beneficiary designations, and medical benefits for
former spouses.
Do teachers need QDROS to divide TRS benefits?
Yes. You need a QDRO if your former spouse is awarded a portion of your
TRS benefits or contributions. The TRS plan administrator must accept
the order before it is enforceable, along with a court-certified copy
of your divorce or dissolution documents. The TRS has specialized staff
to help you if you have any questions about divorce or dissolution.
Is there a deadline for getting a QDRO done?
Every plan has a different deadline for when the QDRO needs to be signed
and sent to the plan administrator. Some plans have deadlines as short
as 3 months from the date the Judge signs the divorce decree. If possible,
you should find out what the QDRO deadline will be in your case BEFORE
your final divorce or dissolution hearing. Have the proposed QDRO ready
for the judge's signature at your final hearing or trial or as soon
as possible after the divorce. After the judge signs the QDRO, quickly
give it to the retirement plan administrator.
Does my former spouse have to sign the QDRO?
Usually you and your ex-spouse write the QDRO as an agreement where you
both sign and the judge signs. But if the parties don't agree about
the QDRO's terms, the judge will make the final decision and enter
the order with or without both parties' consent. The judge can order
a party to sign the QDRO so it can be given to the plan administrator
with both parties' signatures.
What do I file in court?
If you are filing the QDRO
at your hearing:
- The original completed QDRO which includes both parties' social security
numbers. After the judge signs it, give it to the plan administrator.
- A copy of the original QDRO which has the social security numbers blacked
out. This copy will be part of the court file.
If you are filing the QDRO
at the clerk's office either in person or by mail, include:
- The original completed QDRO which includes both parties' social security
numbers. After the judge signs it, give it to the plan administrator.
- A copy of the original QDRO which has the social security numbers blacked
out. This copy will be part of the court file.
- Notice of Filing, This PI document is like a cover sheet that goes with
documents the so the judge knows who filed the QDRO papers.
What happens if I don't get a QDRO?
Depending on your situation, you may not get any retirement benefits from
your ex-spouse's benefit plan. It doesn't matter that the judge
ordered that you get some. No QDRO means no benefits paid direct from
the plan. The only option is for your ex-spouse to send you funds directly.
Not having a QDRO may also have negative tax consequences.
What if the participant dies before retirement?
A QDRO may provide that all or a portion of the participant's benefits
go to the ex-spouse as a survivor benefit in the event the participant
dies before retiring. When applying for retirement benefits, the retirement
plan will require the participant to pick from several different survivor
benefit options to state who will get the survivor benefit and how it
will be paid. The participant may choose the ex-spouse or the participant's
children to receive survivor benefits. The participant might divide the
survivor benefit between an ex-spouse and the participant's children.
The participant may choose that the surviving ex-spouse will get the survivor
benefit in either a lump sum payment or regular payments on a set time
period like monthly payments.
What if the plan participant remarries?
If the divorced participant remarries before retiring, the survivor benefit
usually goes to the new spouse unless the QDRO from the prior divorce
requires that the ex-spouse be treated as the participant's surviving
spouse. If the ex-spouse must be treated as a surviving spouse, then the
new spouse will not receive survivor benefits when the plan participant
dies. Generally, the only way for an ex-spouse to receive survivor benefits
is through a QDRO.
Can the plan participant and alternate payee choose different ways to receive payment?
Yes. If the retirement plan allows different forms of retirement benefits,
like a lump sum or monthly payments, the participant can choose one method
of payment and the alternate payee can choose another method.
Should I get help preparing the QDRO?
If possible, you should talk to someone with expertise in preparing QDROs.
QDROs are very technical documents and can be written more favorably to
one party in the case. It can make a huge difference how the QDRO is written
because the specific language will determine what you will receive or
give up. Some things to get help with:
- what specific formula will be used to calculate the retirement benefits
for each party?
- what is the time period that will be used in the formula – does it
cover the time after the parties married or when the parties lived together
before they married?
- what is the survivor benefit and how it will be paid?
- what is the cost of the survivor benefit and who will pay for it?
- what happens to the alternate payee's benefits upon his or her death?
- are there medical benefits available to alternate payees after the divorce
or dissolution is final?
Who can I talk with about a QDRO?
There are a number of people you can talk with:
- your Human Resources Department at work
- your retirement plan administrator
- tax professional (to understand the tax consequences of the choices you
make at the time of divorce)
- an attorney (to discuss the terms of the property division, including retirement
benefits, to review a proposed QDRO or to draft a QDRO)
Also, there are professionals that specialize in drafting QDROs who may
help you prepare the QDRO.
What laws control QDROs?
A QDRO must contain certain information which is outlined in the federal
Retirement Equity Act of 1984 (EREA) revisions to the Employees Retirement
Income Security Act of 1974 (ERISA), and the Internal Revenue Code. EREA
provides that a divorce court order can divide retirement plan benefits.
The formal definition of a QDRO can be found in the Internal Revenue Code.
The law controlling QDROs is a complex area of the law, and only those
who specialize in it truly understand it. You can learn more from the
U.S. Department of Labor's website.
For many families, a retirement plan is the second largest (after a house)
asset. A wide range of benefits may be considered as marital property
including government (federal, state, and local) retirement plans, company
pensions and 401 (k) or similar plans, Individual Retirement Accounts
(IRAs) and military pensions.
In order to have access to a part of your spouse's benefits under these
plans, you must have a court order. The exact name of the order will vary
based on the type of plan (private or government). The most common order
for a private pension is called a Qualified Domestic Relations Order (QDRO).
A QDRO (pronounced "quad row") is a specific type of domestic
relations order that recognizes the right of an "alternate payee"
to receive all or part of a pension plan, which belongs to another person.
(Pension orders dividing up governmental benefits will have different
names but the general information in this section will still be useful.)
A QDRO is usually used to:
· provide support payments (temporary or permanent) to an "alternate
payee" or
· divide marital property during a divorce proceeding.
A QDRO must meet certain rules under federal law in order for it to be
valid. There is no requirement that both parties (in most cases you and
your spouse) sign an agreement. Read the Law:29 UCS 1056
A QDRO must be issued by a "state authority" (usually a court)
through a judgment, order or decree, which addresses a property settlement.
Not all domestic relations orders "qualify" and can divide a
pension plan.
The administrator of the pension plan must, under certain guidelines,
decide whether a domestic relations order can be a "qualified"
domestic relations order (QDRO).
Any of the following can be an "alternate payee". A pension
plan participant's:
· spouse,
· former spouse,
· child, and/or
· other dependent.
Can I do My Own QDRO?
No, a legally enforceable Qualified Domestic Relations Order (QDRO) must
be part of a judgment order or decree issued by the state authority (usually
a court). You and your spouse can write and sign property settlement agreement,
but it will not meet the federal requirements for a QDRO unless it is
formally approved by a court and it must include certain information to be valid.
Practically speaking, this is an area for trained specialists. For this
document (which will make such a big difference in your future financial
security) you want to have someone who regularly handles cases like yours
and has been doing the work for awhile. Even some attorneys will not have
the knowledge or expertise to draft a good QDRO. Ask an attorney how many
QDRO's s/he has done and what percentage of their practice involves
divorce or related matters. An attorney who does not specialize in the
area will take much longer to investigate, research and then draft the
appropriate document (and therefore cost you more) and will be more likely
to make a mistake.
What Kind of Benefits Could I Expect Under a QDRO?
The amount, type and timing of benefits payable under a QDRO will depend
on your individual circumstances and the specifics of the retirement plan
and how the QDRO is written. However, there are a few general principles
which can give you an idea of the range of possibilities.
· A plan must be a retirement plan in order to be part of a QDRO.
· A QDRO cannot change the basic rules of the retirement plan. For
example, a QDRO cannot require a plan to increase benefits or require
the plan to provide an option not already a part of the plan. The scope
of the plan will control the options available to be considered under a QDRO.
· A QDRO can require your spouse's retirement plan to assign
your spouse's benefits to you or your dependent child.
· A QDRO can assign part or all of your spouse's benefits to
you (or to others).
· The benefits may not be payable until your spouse (ex-spouse)
becomes eligible for benefits (i.e., retires or dies)
· When a QDRO splits a benefit by assigning a portion of it to an
alternate [you or your child(ren)] you are treated by the plan as if you
were a participant.
· If you are a spouse or former spouse, your benefit under a QDRO
will be taxable even if the payment is being made to you in place of child
support (which is otherwise not taxable)
· If you, as a former spouse, receive a benefit you can defer the
tax by rolling the amount over into an individual retirement account (IRA)
within 60 days.
· If the "alternate payee" is someone other than the spouse
of the plan participant (such as the child of the participant), the participant
pays the tax on the payments.
· In many employee plans, there is a benefit payable when the former
employee dies. Whether or not, a QDRO can be used to assign you a benefit
will depend on several factors such as whether the plan had already started
paying benefits when the QDRO was issued, the type of plan (defined benefit
or defined contribution) and who the alternate payees are.
Is There a Limit on What Percentage of the Retirement Plan Benefit that
can be Assigned to Someone Else Under a QDRO?
The federal law does not impose a limit. An alternate payee can receive
all or part of the participant's benefits. An alternate payee is the
spouse, former spouse, child, or other dependent of the "participant"
as identified in the QDRO. The participant is the employee covered by
the retirement plan.
When can a QDRO be Issued?
Qualified Domestic Relations Orders (QDRO's) are used most often as
part of a divorce. They can also be issued during a legal separation or
to pay a support obligation.
How can a QDRO be Used as Part of a Divorce?
A Qualified Domestic Relations Order (QDRO) can be used to assign future
/ or current retirement benefits as part of a property settlement.
Can a QDRO be Used After a Divorce?
Yes – A Qualified Domestic Relations Order (QDRO) could be used to
pay past due spousal support (during a separation), alimony or child support payments.
Reminder – In Maryland, there is no law governing a "legal
separation", however a type of divorce called a "limited"
divorce is essentially a legal separation. See the section on types of
divorce in Maryland for more information on limited divorces.
What Paperwork Should I Find to Take to My Attorney?
· The plan summary booklet for each pension
· The plan document (full set of the rules) for each pension. (The
rules for most government pensions will be in the law and regulations
and can be found at a law library.)
· Proof of your relationship (and that of your child(ren) to the
plan participant.
Will the Type of Plan Make a Difference in How Complex and Expensive it
will be to Create a QDRO?
Yes – Generally a defined contribution plan offers fewer challenges
to the attorney who drafts the QDRO and may be less expensive to draft.
An attorney working with a QDRO for a defined benefit plan may face more
difficulties and may need to charge more for the drafting. S/he may need
to hire a person with specialized financial knowledge (called an actuary)
to determine the formula for calculating the benefit to be assigned under the QDRO.
How do I Know What Type of Plan My Spouse or I Have?
The employee's copy of the plan summary or the plan administrator (organization,
committee person - responsible for overseeing the plan) will indicate
whether the plan is a defined contribution or a defined benefit plan.
The contact information will be in the front of the plan document.
What are Some of the Options for Dividing a Pension Under a QDRO?
Often the approach to dividing a pension will differ depending on whether
the QDRO is designed to provide support or to be part of a property settlement
agreement. FYI – If you are seeking to have your spouse's pension
divided – your spouse is called the "participant" and
you are the "alternate payee".
Marital Property Settlement Agreement – These QDRO's often (but
not always) divide the participant's retirement total benefit into
two parts. The alternate payee (you) can then receive the payment at a
different time and in a different way than the plan participant. The alternate
payee (you) would have the same options that the plan participant (your
spouse) would have. For example, you might be able to take benefits at
the "early retirement age" while your ex-spouse waited until
full retirement. Both of you would still have to follow the plan rules.
Some plans will pay a lump sum rather than an annuity to an alternate payee.
Support – Alimony, Marital or Child Support – Another approach
is to divide each benefit payment. This approach is often used when the
participant has already begun to receive benefits and has an ongoing support
obligation. Agreements usually specify a percentage and a time period.
Under this approach the alternate payee (you) will not receive any payment
unless the participant (your spouse) receives a benefit or is in pay status.
Other questions to be resolved include whether there are survivor benefits
and, if so, will and how they be divided.
How Do I Get Information About My Spouse's Retirement Plan? My Spouse
Refuses to Give Me a Copy.
Call your spouse's employer to find out who administers the pension
plan. Usually the human resources department will have that information.
They are unlikely to give you any personal information over the phone,
but you should be able to obtain the general contact information for the
pension plan administrator. Ask the administrator how to handle the request.
You should make the request in writing. They may require that your request
be in writing and there may be a charge.
The plan administrator for your spouse's employer (or former employer)
can be the best source of information about the plan for potential "alternate
payees" such as the plan participant's spouse, child(ren) or
other dependents. Ask for a copy of the summary plan description and a
statement of the participant's benefit entitlements. The Federal Department
of Labor (DoL), which interprets the QDRO law, recommends that plan administrators
provide this information. DoL notes that a plan administrator may require
you to provide enough information to prove that you are making the request
in connection with domestic relations or divorce case.
When Can I Receive Benefits Under a QDRO?
If your benefit is a share of the participant's benefit that s/he is
already receiving, you will be eligible for benefits on the date listed
in the QDRO (assuming it is not before the date that the plan gets a copy
of the QDRO).
If your benefit under a QDRO is based on a separate interest (like that
described for marital property settlements under the "options"
question of this section) you may receive benefits at the "earliest
retirement date" of the participant unless the plan allows an earlier date.
In general, the earliest date you could receive benefits is a time defined
by federal law called "earliest retirement age". If plan rules
set an earlier date, you may receive benefits then.
Pension Evaluators & Qdros Of Troyan, Inc Associates Group
Actuarial Pension Appraisal & QDRO Preparation Firm
Phone: 800-221-0706
Fax: 732-212-1113
PO Box 8722
Red Bank, New Jersey 07701
www.pensionevaluatorsonline.com