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Qualified Domestic Relations Orders

Posted on in QDROs, Pensions and 401(k)s

b2ap3_thumbnail_QDRO.jpgMany high asset divorces require the division of substantial retirement funds, which in Texas, usually involves the issuance of a Qualified Domestic Relations Order (QDRO). These orders, which are issued by a judge, essentially separate and transfer retirement plans between two parties. In fact, the issuance of a QDRO is often necessary before an employer’s pension plan administrator will even agree to divide a retirement account. QDROs contain valuable information, including how the account will be utilized going forward and how its contents will be divided. If you have retirement benefits that were at least partially accumulated during your marriage, you may need to divide those funds with your ex-spouse upon divorce. To learn more about this process, please contact an experienced high asset divorce attorney who can address your questions and concerns.

Dividing Retirement Funds

A party’s retirement funds are not always divisible upon divorce, as courts will usually only order equitable division if funds were accumulated during the marriage itself. Although it depends on the type of account, this means that the retirement funds will either pay out on a regular basis in the future or will be available for withdrawal at the parties’ discretion. It’s also important to note that the only funds that will be subject to division are those that accumulated during the marriage. Funds that accrued prior to the marriage will remain the sole property of the named participant.

What Is a QDRO?

Certain retirement accounts, such as 401(k)s and pensions can only be divided after a QDRO has been issued, sent to, and processed by the retirement plan’s administrator. Once processed and approved, the QDRO will:

  • Identify the participant and the alternate payee;
  • Identify the plan;
  • Set the date for division;
  • State the dollar amount or percentage of the funds that each spouse will be awarded; and
  • Explain whether either spouse will assume responsibility for a loan taken out against the account.

QDROs can also detail how payments will be impacted if one of the parties remarries. However, QDROs do have a number of limitations. For instance, these documents cannot create new benefits or increase benefits for the participant or alternate payee. Similarly, they cannot modify plan rules or create alternate vesting or distribution schedules.

Ensuring that a QDRO is drafted correctly is important, as any mistakes could result in the order being rejected and not qualified by the plan, which in turn means that the assets will not be divided.

Call Today to Get the Legal Representation You Deserve

Please contact the Law Offices of William D. Powers if you have questions about dividing your retirement funds upon divorce. Our dedicated Round Rock high asset divorce attorneys are eager to help you resolve your concerns.

 

Source:

http://www.statutes.legis.state.tx.us/Docs/GV/htm/GV.804.htm

The Law Offices of William D. Powers

8911 N. Capital of Texas Highway, Building 2, Suite 2105, Austin, TX 78759