QDRO Basics (#2 of 5 Installments)

by Norris Law Group on February 11, 2014

qdro-attorneyIn our previous installment, we discussed Qualified Domestic Relations Orders (QDRO’s) and the role they may play in a divorce settlement. In this installment, we provide an example of what a 50/50 split set up by a QDRO may look like, as well as of the kind of language that should be included in an effective QDRO.

An Example of a 50/50 Split

Ben started working at ABC Company on March 4, 1962. The company offered a pension plan and the opportunity to contribute to a 401(k). Ben started participating in both retirement plans. Ben married Alice on April 21, 1967. Ben continued to work at ABC Company throughout their marriage. Ben and Alice got divorced on September 13, 1999. The divorce decree stated that Alice would get 50% of Ben’s retirement as of the date of the divorce. Ben retired from ABC Company on February 12, 2012. For both the 401(k) and the pension, Alice would only get 50% of Ben’s retirement accounts through September 13, 1999. Ben would get the entire amount in the retirement accounts starting September 14, 1999.

The Plan Administrator and Model Language

Before drafting the QDRO, you should contact the plan administrator to see if there is any model language that should be used. If there is, ask the administrator to send you a copy of this language. If there is model language, there are a few things may come up: the plan administrator expects you to follow the language exactly; there could be fees for not using the model language; and the language highly favors the plan over the plan participant. If the model language puts the plan participant at a disadvantage, it may be worth paying the fee and using different language that would be more beneficial. Typically the fee is a pittance compared to the amount of retirement funds that would be lost—for example, a $300 fine versus a $3500 loss of retirement funds. Each situation is different, so make sure to weigh the possible outcomes.

Our next installment takes a look how a QDRO should be written in conjunction with a divorce decree, and at what point a QDRO should be drafted.

Although QDROs are required by federal law, many attorneys do not draft them, based on their extremely technical requirements. Attorney Graham Norris has several years of experience drafting QDROs from private plans, government plans and the military. Other attorneys also refer their clients to Graham Norris for the drafting of QDROs. He can  draft QDROs for divorce decrees originating in Utah, Idaho, California or Wyoming. Contact his offices today at 801-932-1238 or online for a free consultation.

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