When it comes to divorce proceedings, California law concerns itself with the division of shared assets acquired during the marriage. Generally, anything either spouse owned previously or is the sole recipient of won’t change hands, though there are some exceptions. Certain retirement accounts, for example, could be split as part of the divorce, but doing so isn’t automatic.
Qualified Domestic Relations Orders (commonly referred to as QDRO) provide guidelines for distributing one spouse’s retirement account due to divorce. For example, if your spouse was the primary earner in your household, a QDRO could grant you a portion of what’s in their retirement account. However, QDRO is not an automatic divorce process; it must be prepared by you and presented and approved by the court.
Thankfully, the process isn’t as complex as you might think. We’ve helped countless clients prepare their QDRO and want to pass our experience on to you. Below you’ll find an introduction to QDRO, what they cover, and what you should consider when preparing one.
Why Use a QDRO?
If you think you’re entitled to some of your spouse’s retirement benefits, a court-approved QDRO can ensure you’ll get any of the funds. Even though you can name a retirement account in a divorce decree as an asset, that may not be enough depending on the type of retirement account in question. So, as a court order, a QDRO will make a legally-binding directive naming you as a recipient of the account.
Federal prevents most retirement accounts from paying benefits to anyone other than the account owner. While the owner can distribute those funds however they see fit on their own, they do so at their discretion. For example, a QDRO directs the account administrator to allocate some funds to an alternate payee, such as an ex-spouse.
When Should I Get a QDRO?
We get that the divorce process can be complex and overwhelming, but it’s in your best interest to get a QDRO as soon as possible. It’s even possible to get a QDRO before divorce proceedings have begun. However, there is a point where it becomes increasingly difficult and sometimes impossible to acquire or enforce a QDRO.
If the divorce finalizes before your QDRO is submitted and approved, it will not apply, instead of requiring a separate process to take place. Once the account owner retires following the divorce and begins receiving payments, you may submit a QDRO. Still, because it’s after the fact, any benefits you receive won’t be applied retroactively. So if you want to secure retirement payments, get the QDRO as early in the process as you can.
How Do I Get A QDRO?
A common misconception about QDRO is that applying for one is as simple as submitting a request to the court. However, this isn’t entirely true. The language used in a QDRO needs to be incredibly precise and legally actionable, hence why you should leave the writing to legal professionals.
Your divorce attorney may be able to draft a QDRO, but don’t be surprised if they refer you to another family law attorney to get the best legal documents assistance. Keep in mind that there are many branches to family law, and professionals in each field will have their own set of specialties. So while a spousal support attorney can provide you with divorce services, they may rely on other specialists to help with QDRO.
Once you have your plan prepared, you must notify the court. Once reported, the court will contact your spouse to get the requisite information about their retirement account and benefits. If your spouse refuses, you can instead contact the administrator of their retirement account with your QDRO.
How Much Money Am I Entitled To?
Undoubtedly, this is the most common question surrounding QDRO, especially with those new to the concept. It is, unfortunately, a difficult one to answer with a concrete figure. Whereas California law has rules in place for figuring property division in a divorce, it’s more complicated to calculate how to split a QDRO.
Say that the judge presiding over your case issues the QDRO and determines to divide the account in a certain way. Whoever helped craft your QDRO then contacts the plan administrator with the court order. Finally, the administrator and the attorney will calculate the final number between the court order and the plan’s own rules.
Since it involves so many factors, there’s no way to say how much you may receive beforehand. Moreover, even if you and your spouse mutually agree to split the account as part of your divorce (sometimes called a buy-out), it’s challenging to determine what you’ll receive because the account is still growing, and you don’t know when your spouse will retire. In either case, it may be best not to go in with set expectations.
Which Plans Require a QDRO? Which Plans Don’t?
As alluded to earlier, different types of retirement plans do not require a QDRO. These plans (deferred annuities, military pensions, government retirement plans, and IRAs) don’t fall under the Employee Retirement Income Security Act and cannot be subject to QDRO. Your attorney can walk you through the process of getting these assets divided.
The types of accounts that require a QDRO include:
- Profit-sharing
- Business pension plans
- Employee stock ownership
- Money purchase
- 401(k)
- 403(b)
- 457
- Thrift plans
- Tax-sheltered annuities
- Other private retirement accounts
You should know what type of account your spouse has once you have filed for divorce (both parties will need to submit detailed financial information as part of the proceedings. If you’re unsure, your attorney can begin the process of requesting this information on your behalf. Once the account type is known, they can submit the correct information to the court and plan administrator.
Do I Need a QDRO?
A QDRO isn’t needed to divide a retirement account as part of divorce proceedings, but it’s not uncommon for lawyers to recommend it during a divorce consultation. However, California allows (and encourages) divorcing couples to agree to how they want their assets divided–including retirement accounts–rather than leave it to the courts. However, if your spouse is unwilling to compromise, a QDRO is required.
Let Valley Divorce Services Prepare your QDRO
Many aspects of divorce are complicated, but none more so than document preparation. Unfortunately, choosing to draft your own documents without the requisite legal knowledge could result in dire consequences. But don’t worry; we’re here to help.
At Valley Divorce Services, we have over twenty years of paralegal experience. Let us use our skills to wholly and carefully draw up the documents you need for your divorce, will, name change, custody agreement, notary, deed transfers, or other legal actions. Visit us now to learn more about how we can help you.
