1.  What is a "Domestic Relations Order?"  A domestic relations order is a judgment, decree or order that is made pursuant to state domestic relations law and that relates to the provisions of child support, alimony, or property rights. (Click here to return to Question #1.)

 

  2.  What is a "Qualified Domestic Relations Order?"  A qualified domestic relations order ("QDRO") is a domestic relations order that creates or recognizes the existence of an alternate payee’s right to receive, or assign to an alternate payee the right to receive, all or a portion of a retirement plan.  (Click here to return to Question #2.)

 

  3.  What is a retirement plan?  There are two types of retirement plans — defined benefit plans and defined contribution plans. A defined benefit plan provides for a specified monthly benefit for life, beginning at retirement and which often is calculated based on years of employment and compensation paid.  A defined contribution plan involves contributions to an account by the employee and/or the employer which are invested in a variety of mutual funds and/or securities. Under a defined contribution plan, the participant gets whatever the account earns.  (Click here to return to Question #3.)

 

  4.  Who is the "Participant" under a QDRO or a DRO?  The Participant is the person who has earned the retirement benefit.  (Click here to return to Question #4.)

 

  5.  Who is the "Alternate Payee" under a QDRO or DRO?  The Alternate Payee is the person that is being awarded a part of the retirement plan as part of the family law proceeding. The Alternate Payee can be a spouse, former spouse, child or other dependent of the Participant.  (Click here to return to Question #5.)

 

  6.  Why is a QDRO so important?   Retirement plans are usually a divorcing couple’s largest asset aside from the family residence. Care should be taken when dealing with such significant assets and should be one of the main focuses when thinking about a property settlement. It is also a source of alimony and child support payments.  (Click here to return to Question #6.)

 

  7.  If there is a Court approved property settlement agreement, is a QDRO necessary?    The property settlement agreement generally does not contain all the details required by the Employee Retirement Income and Security Act of 1974 ("ERISA") and therefore will not be accepted by most plan administrators as a QDRO.  (Click here to return to Question #7.)

 

  8.  Should the parties wait until the Participant spouse retires to prepare the QDRO?  No, a QDRO should be prepared concurrently with or immediately after the Final Judgment of Dissolution is entered. This is especially true of defined contribution accounts where plan administrators require a simple percentage or a dollar amount to divide the account as of the date of separation. However, it is well settled law that the Alternate Payee is entitled to one-half the community interest in the defined contribution account plus interest, earnings and losses from the date of separation to the date of distribution. If a QDRO is prepared immediately after the date entry of judgment the amount of earnings, interest or losses to the date of distribution may be de minimis. If the date of distribution is months or years from the date of separation it will require the help of a forensic economist to determine the impact of the interest, earnings and losses on the Alternate Payee’s community property portion to the date of distribution.  (Click here to return to Question #8.)

 

  9.  Is it possible for the Alternate Payee to lose his/her rights to the retirement benefit?   Yes, if the Participant dies before the QDRO is finished and approved by the plan administrator, the Alternate Payee runs a substantial risk of losing his/her interest in the pension.  (Click here to return to Question #9.)

 

 10.  Is court approval of a QDRO all that is needed for the order to be a QDRO?   No, a domestic relations order is not a QDRO unless the order has been approved by the plan administrator. If rejected by the plan the QDRO must be revised until accepted. A common mistake that attorneys make is to submit a court approved QDRO to the plan administrator without seeking pre-approval. Unless you reserve jurisdiction over subsequent modifications the court does not have jurisdiction to approve subsequent orders.  (Click here to return to Question #10.)