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The Divorce/Legal Separation Is Final, But You’re Likely Not Done Yet: A Checklist For Getting Your QDRO Prepared Correctly The First Time

Posted by Corey F. Schechter | May 12, 2017 | 0 Comments

Contributing Author: Dianne Schechter, Paralegal

The divorce process is full of details, stress, and decisions.  After the divorce is final, you and your divorce lawyer cannot drop the ball and ignore performance under the terms of the final judgment.  If your final divorce decree or marital settlement agreement includes the transfer of retirement benefits, consider these helpful tips:

1. Contact and hire an experienced ERISA attorney who can help you decide the best course of action to take regarding the division of your retirement benefits. Experienced ERISA attorneys, who are familiar with complex employee benefits laws, can help you transfer any retirement plan assets by having a qualified domestic relations order (“QDRO”) (a separately required court order) prepared, signed by the judge in your case and properly approved by the retirement plan administrator.

2. Have all of the proper documentation you need to get your QDRO done correctly by providing your ERISA attorney preparing your QDRO with certified copies of the final judgment of divorce from the courthouse and a copy of your certified marital settlement agreement.

3. Provide your ERISA attorney preparing your QDRO with any retirement plan documents or statements that contain the proper name of the retirement plan, and allow your experienced ERISA attorney to provide accurate valuations of your portion of the retirement benefit to be divided by the QDRO.

4. Once the dust settles, re-read your final judgment to make sure you and your now ex-spouse have complied with all its terms, especially the terms regarding division of the retirement benefit(s) and any particular details involving those benefits (such as survivor benefits, beneficiaries, and death). If your spouse refuses to comply (which sometimes happens when it is time to sign the QDRO and file the order with the court) or simply won't comply with its terms timely or by certain deadlines, let your QDRO attorney and your family law attorney know.  The lawyers can file a motion for contempt or a motion to enforce a court order against your uncooperative ex-spouse.

5. There are also potential tax consequences to consider with regard to transferring retirement benefits, which is one more reason why you should hire a seasoned ERISA attorney to prepare your QDRO to divide your retirement benefits. A tax-free transfer between spouses can be accomplished with the QDRO.  The QDRO allows a spouse to rollover the retirement assets he or she receives by way of the QDRO to an IRA or other qualified plan account in their name.  This allows the spouse, whose account the funds are being transferred from, to avoid any taxes associated with a distribution of the account, and properly transfers the tax obligation to the spouse receiving the transferred funds at the time he or she takes a distribution of their account.

Contact the experienced ERISA lawyers at Butterfield Schechter LLP with any questions concerning the division of your retirement benefits pursuant to a divorce or legal separation, or if you require assistance with the preparation of a QDRO or other domestic relations order to divide retirement benefits.  We will worry about the details so you don't have to!

About the Author

Corey F. Schechter

Corey Schechter practices in the areas of Employee Benefits, Employee Stock Ownership Plans, Pension and Profit Sharing Plans, ERISA, ERISA Litigation, Business Law, Qualified Domestic Relations Orders (QDROs), and Employment and Labor Law.

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Retirement Plans

We help establish a customized plan that meets regulatory requirements as a tax qualified plan. Following implementation, our attorneys can assist clients and their plan administrator with regular reviews and updates to help with regulatory compliance for the plan's operation, and continued effectiveness in meeting the client's specific goals.

ESOPs

We are dedicated to employee ownership. When you come to us for ESOP services, you receive influential legal counsel who stand beside you to help you stay informed, in compliance, and abreast of the latest developments-all to help you realize your plan goals as fully and effectively as possible.

QDROs

A QDRO is a specially designed court order that is required for the division of retirement benefits in a family law case. Many family law attorneys do not possess the expertise necessary to divide retirement benefits or stock options upon divorce. We have extensive experience in dividing qualified plans, government plans, IRAs and stock options between the employee spouse and non-employee spouse.

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