The preparation of QDROs and similar-like Orders are fraught with landmines. Although the basic requirements of a QDRO are straightforward and it seems simple, the preparation of QDROs are becoming plan specific and more complex. Attorneys and other professionals should pay close attention to each individual retirement plan and its unique rules and requirements. In addition, the information needed for a QDRO should always be addressed during the divorce settlement negotiations. This handout is prepared to assist attorneys and divorce financial advisors.
BEGINNING OF THE CASE
- Obtain information for all plans with the Participant’s employer
- Collect dates of membership, participation in the plan and any breaks in service
- Obtain a complete copy of each retirement plan statement (not a screen print)
- Know the complete formal name of the plan
- Verify beneficiary designations and insure they remain intact until the divorce is finalized
- Obtain plan documents (SPD (for pension plans), written divorce procedures, Model DRO)
- Understand each type of plan and determine whether it is divisible (Value pension benefits if needed)
- If the plan is not divisible, understand the various options to consider
- Know if the plan will award survivor benefits to the former spouse (DB plans)
- Determine if any other prior QDROs been submitted on any plan
DURING NEGOTIATIONS
Defined Contribution Plans:
- Determine if any pre-marital or post-separation amounts exist
- Find out if any loan balance exists and when any loans were obtained to determine if marital or non-marital
- Determine if any after-tax contributions exist
- Typically, the Plan will not calculate the marital portion between two dates–that must be done as a
separate calculation
Defined Benefit Plans:
- Know if the Participant is still working or has terminated service/retired
- If Participant is retired, confirm the benefit election chosen (especially survivor benefits), and find out the
monthly payment amount being received (and any deductions) - Understand if retirement occurred at normal retirement age or earlier?
- If earlier, is the Participant receiving any early retirement subsidies and/or supplements, or COLA’s?
- Inquire on whether the Participant can change their benefit election upon divorce?
- If not retired, obtain a copy of the employee’s annual benefit statement
This document was prepared to give an overview of some of the various items to consider when dealing with employer retirement plans during divorce. Cheswick Divorce Solutions, LLC does not express any opinion as to the outcome of any legal matter, nor do we render anything that could be construed or interpreted as legal or tax advice.