When couples get divorced they must decide how to divide their property. Retirement benefits (pensions) are often one of the largest marital assets the parties have in addition to the marital home. Like other assets, pensions may be transferred from one spouse to another in cases of divorce to the extent that part of the pension was acquired during the course of the marriage.
A wide range of retirement benefits are considered marital property including government (federal, state, and local) retirement plans, private plans, private company pensions, 401(k) plans, 403Bs, Individual Retirement Accounts (IRAs), TSPs, FERS pensions, Maryland State Retirement pension plans, Military pension plans and other such pension plans.
In order to divide the benefits under these plans, the parties must submit the appropriate Court Order to a Judge for signature and entry. The exact name of the order will be governed by the type of plan that one party is a beneficiary of, such as a private or government plan. The most common order for private pension plans is called Qualified Domestic Relations Order (QDRO). A QDRO is a specific type of domestic relations order that recognizes the rights of a spouse, also known as an alternate payee, to receive a portion of the pension plan belonging to the other spouse. Note all pension plans are called QDROSs and each plan has a specific name, depending on the type of plan the spouse obtains benefits under.
The court can also order the garnishment of a retirement account to pay a child support or alimony obligation.
A QDRO must comply with specific rules under federal law in order for it to be valid. The QDRO must be issued by a state authority (usually a court) through a judgment, order, or decree, which addresses the property settlement. Not all domestic relations orders qualify and will be permitted to divide a pension plan. The plan administrator, an employee of the plan, reviews and accepts the QDRO after it has been determined that the QDRO is a valid Qualified Domestic Relations Order acceptable for processing.
QDRO TIME LINE
Client or counsel for client retains Weinberg & Schwartz, LLC:
client returns signed retainer agreement
client returns completed QDRO Preparation Form
client provides a current account statement
client provides Separation Agreement and/or Judgment of Divorce
client pays retainer fee
Weinberg & Schwartz, LLC drafts the Order(s)
Weinberg & Schwartz, LLC submits the draft Order(s) to the client or counsel for client for edits/approval
Client or counsel for client gives Weinberg & Schwartz, LLC edits/approval of the draft Order(s)
Weinberg & Schwartz, LLC submits the draft Order(s) to the Plan(s) for pre-approval (the Plan may take thirty (30) days to give pre-approval) if pre-approval is available (government and military Plans do not give pre-approval and pre-approval is not available for IRA Orders)
Weinberg & Schwartz, LLC receives pre-approval and/or edits from the Plan(s)
Weinberg & Schwartz, LLC makes edits as necessary and submits final Order to client or counsel for client
Client and spouse or former spouse sign the final Order(s)
Client or counsel for client files the Order(s) with the Court for a judge’s review and signature (this can be done at the time of the divorce hearing or after); Weinberg & Schwartz, LLC does not file the Order(s) with the Court
Client or counsel for client receives the certified copy of the Order(s) from the Court
Client or counsel for client sends certified copy of the Order(s) (and certified copy of Judgment for Absolute Divorce per Order-if government or military order only) to Weinberg & Schwartz, LLC
Weinberg & Schwartz, LLC sends the certified Order(s) to the Plan(s)
The Plan(s) divides the funds according to the Order(s) (this process can take up to thirty (30) days, and any communication regarding this step should be between the client or counsel for client and the Plan Administrator)
Weinberg & Schwartz, LLC closes the client’s file