As referenced in the “Division of Marital Assets” blog, when divorcing spouses have assets in retirement plans, those funds are divided using a “qualified domestic relations order” (QDRO). This is a court order that recognizes someone other than the retirement plan beneficiary as an ‘alternate payee.’ This person is typically the other divorcing spouse, but can also be a child or other dependent of the divorcing party.
Domestic relations orders
A Texas family law court approves a property settlement agreement before it issues a domestic relations order. The term ‘qualified’ describes a form of ‘domestic relations order’ issued by a family law court. This is a court order or decree (including a property settlement) under Texas family law. Like other divisions of assets, it applies community property law to the provision of marital property rights for the benefit of a spouse (or former spouse, child, or other dependent of a party to the divorce.)
Texas Family law courts issue domestic relations orders to approve marital asset/property settlement agreements including retirement assets under Texas family law (as discussed in the ‘Division of Marital Assets’ blog.
A spouse’s retirement plan can not follow the terms of a domestic relations order assigning retirement benefits unless it is a QDRO under federal employee benefits (ERISA) and tax law.
A QDRO is a legal document separate from the divorce agreement, although it often accompanies a divorce decree or other divorce settlement agreement under a Family Court order. It gives the recipient, or “alternate payee” spouse the right to receive all or part of the benefits payable to the named beneficiary or payee spouse under his or her retirement plan.
Do’s and Don’ts of QDROs
A QDRO must include:
- The name and last known mailing address of the participant and each alternate payee,
- The name of each plan to which the order applies,
- The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee, and
- The number of payments or time period to which the order applies.
A QDRO must not require a retirement plan to:
- Provide an alternate payee or participant with any type or form of benefit, or any option, not otherwise provided under the plan,
- Provide for increased benefits (determined on the basis of actuarial value),
- Pay benefits to an alternate payee that are required to be paid to another alternate payee under another order previously determined to be a QDRO, or
- Pay benefits to an alternate payee in the form of a qualified joint and survivor annuity for the lives of the alternate payee and his or her subsequent spouse
Attorneys know that QDROs can be complex documents. Our experienced Burleson divorce attorneys are ready to answer your questions about QDROs and prepare a QDRO to meet your individual divorce needs. To learn more about how use a QDRO to divide retirement assets in your divorce contact a knowledgeable divorce lawyer at Lovelace Law today.
If you have any additional questions regarding divorce or potential divorce, call our Burleson attorney office at 817-953-9656 to make an appointment with Cade Lovelace or Jennifer Lovelace for a free consultation.