A Qualified Domestic Relations Order (QDRO) is a court Order directing an employer to segregate retirement accounts and award a spouse his or her share of the other’s retirement account – like a pension, 401(k), etc. A QDRO is usually created simultaneously or shortly after entering the Final Divorce Decree, although your attorney may advise you that you to file the QDRO and obtain its approval by the Plan Administrator concurrently with the divorce or dissolution of marriage (“incorporating the QDRO by reference”).
Why a QDRO?
QDROs are common in the area of divorce and are permitted by the Employee Retirement Income Security Act (ERISA) to avoid benefit plan provisions that prohibit a benefit plan from distributing a participant’s benefits to anyone other than the participant himself or herself. Since retirement plans are controlled by ERISA, the plan administrator can require certain language to be included in an order prior to segregating or dividing the benefits. A properly drafted QDRO will make a former spouse of a plan participant eligible to receive a portion of the participant’s accrued pension, 401(k) or profit sharing plan benefits. In extreme cases, QDROs can also be used to collect past-due child support or spousal support arrearages.
QDROs are complex and technical documents. Therefore, if you’d like to file or modify a QDRO, you should consult an attorney who is prepared in preparing them to assist you in drafting the QDRO.
What to Expect
First, your attorney will fully review the terms of the pension or deferred compensation plan, and the summary plan description, if one is available. Second, your attorney will need to learn about the nature of the benefits, including any joint and 50% survivor annuity benefits or post-retirement benefits that may be available. If you or your spouse is covered under a unique retirement plan – such as military retired pay, railroad pensions, or a federal or state government pension – your attorney can be especially helpful in making sure that the plan(s) are divided within the court rules and to your best advantage. While most government pension plans are not covered by ERISA, many have similar requirements as QDROs for division of benefits, although each system also has its own unique requirements and features.
Next, your attorney will likely request the Plan Administrator to provide any model QDROs or required terms to be included in the QDRO. The Plan Administrator determines whether a QDRO is qualified and, even though the QDRO is actually a court order signed by a judge, it is not considered qualified until the Plan Administrator approves it.
A QDRO may not alter the amount, form, or other provisions of benefits otherwise payable under the plan(s), and:
- May not require a plan to provide any type or form of benefit, or any option not otherwise provided under the plan;
- May not require the plan to provide increased benefits (determined on the basis of actuarial value);
- May not require the payment of benefits to an alternate payee that are required to be paid to another alternate payee under another order previously determined to be a QDRO.
After drafting the QDRO, your attorney will make its submission to the Plan Administrator; enter an equitable distribution order; and make sure that you receive written confirmation from the Plan Administrator explaining that the QDRO has been received and its terms are acceptable and will be honored by the plan.
QDROs can be used to collect support arrearages in certain circumstances.
In December 2011, the Virginia Court of Appeals upheld a trial court ruling that permitted a mother to use a QDRO to attach a father’s retirement account to collect a $28,000 child support arrearage, even though the mother waived any personal interest in the account in a premarital (aka “prenuptial”) agreement. (Nkopchieu v. Minlend (Beales) No. 0500-11-4, Dec. 20, 2011).