A QDRO is a court order which is used to divide pension rights between divorcing spouses, or to collect alimony or child support from a private employee benefit plan. QDROs are complex legal documents and should be prepared only by a qualified and experienced attorney.
A public or governmental plans, such as military pensions, federal, state, county, or city retirement plans also require a domestic relations order (“DRO”) to divide their pensions in a divorce. DROs are similar to QDROs but are governed by their respective governmental codes rather than ERISA. Most DROs are referred to as QDROs when discussing the division of pension benefits.
A QDRO can be “loaded” to favor one party or the other. It is important that the participant or former spouse consult with someone who has knowledge in this complex area and can work on the client’s behalf to protect his or her interests and divide the benefit as fairly as possible. The parties may also want to retain a QDRO attorney as a court appointed expert, and as such that attorney would draft the QDRO as fairly as possible and provide both parties with the various options and limitations in the Plan.
Many plans will have model QDRO language. In most cases, model language is designed to benefit the plan first, then the participant and lastly to provide the minimum distribution payable to a nonparticipant spouse. These documents should be used cautiously and modified as necessary to create a balanced division. The only benefit of model language for this firm is that it provides a view as to how a plan interprets ERISA and/or relevant government code sections. Then we also see that often when a party retains this firm after trying to complete the QDRO on his or her own, it has not been completed properly. This firm’s services make sure that all issues are handled properly with the QDRO division, particularly regarding survivor benefits and a fair division of the asset. In most cases, the law governing retirement plans is federal law which preempts state law. The law is very complex and QDROs not prepared properly can harm the nonparticipant spouse and also with some plans the participant. There is a reason that most family law attorneys will not touch QDROs but refer these matters to a specialist like our firm.
Delaying in obtaining a QDRO may result in losing valuable rights. You also run the risk of forfeiting all of the benefits which were awarded to you in your divorce. Your rights may be lost if, before your QDRO is completed, your former spouse retires, becomes disabled, remarries, dies, quits or is fired, withdraws funds from the plan before retirement, or takes out a loan from the plan. Ideally, the process of obtaining a QDRO should be completed early in the divorce process and occur at the same time as the parties negotiate the division of marital property, maintenance, child support and other divorce-related issues. However, if the QDRO is not completed before the divorce, it should be completed soon thereafter. A QDRO may also be obtained anytime for child or spousal support.