In some divorces, dividing retirement benefits is simply not an issue: perhaps no retirement benefits were acquired during the marriage, or maybe both former spouses already have every pertinent retirement interest set forth in their own names. But, when divorce decree or settlement terms do touch on retirement plans, obtaining a document known as a qualified domestic relations order (“QDRO”) can be extremely advantageous.
What Is A QDRO?
A QDRO is an order issued by a court (or a state agency with the proper authority) that creates a right for an alternate individual to receive some portion, up to and including the full amount, of retirement benefit payouts under a given plan. Essentially, a QDRO forces the provider of retirement benefits to make direct payments to the former spouse of a particular participant in their plan.
At a minimum, a QDRO must contain the following information: the names and addresses of the retirement plan participant and all alternate payees, the name of the plan in question, the amount (or a formula for determining the amount) of benefits to be paid to the alternate payee, and the number of payments required or a time period covered by the QDRO.
Benefits of QDROs
While a QDRO is not strictly required in order to receive a portion of your former spouse’s retirement benefits, pursuing a QDRO is usually the best course of action.
When you are awarded half or some other proportion of the interest in your former spouse’s retirement plan, a QDRO allows you to receive your benefits directly from the provider. You do not have to rely on your former spouse for payments, and tax consequences on each share are accounted for. Direct rights are also usually easier to enforce than other options.
Another huge benefit of a QDRO is the control it gives you. With a QDRO, you will have just as much power over your portion of your ex-spouse’s retirement plan as you would if it was your own individual plan. This can be significant, for instance, if your former spouse decides to work beyond the standard retirement age but you would like to begin receiving immediate payments.
Speak With an Attorney
If your divorce involves retirement benefits, your divorce attorney can help you obtain a QDRO and ensure your financial interests are protected. Contact a family law attorney to explore your options today.