QDRO Law Experts for Your Law Firm
The Variables of Divorce
No doubt, QDROs can be complicated. From state requirements to individual account requirements, on top of all the divorce proceedings, “complicated” can be an understatement. Consider the following three examples. A lawyer is working on a divorce case for a military couple. The husband served in the Air Force. The wife was not a service member. The judge awards the wife 50 percent of the husband’s military retirement plan. The lawyer then files the QDRO with the plan administrator, but the plan administrator rejects the QDRO. This is a sequence of events we see often. The lawyer is left scratching his head. Was the QDRO filled out improperly? Was it filed incorrectly? We get many calls from attorneys and others who have QDRO rejections. Many attorneys may not be aware of QDRO specifics as they relate to each type of retirement account. In this case, they may have overlooked the 10/10 rule stating that the non-serving spouse may only be entitled to a smaller portion of the retirement, not 50 percent. The 10/10 rule requires the couple to be married for 10 years or more, and the spouse who served must have been active duty military for 10 or more years. Finally, those 10 years must overlap the marriage. The couple won’t meet the guidelines if, for instance, they have only been married eight years and the serving spouse was active in the military for only the first Any number of reasons may explain why the QDRO was rejected, but we can narrow it down.
“With so many variables in play, one small mistake or one question not asked can be incredibly costly.”
four years of that marriage. This is a very surface-level explanation of the 10/10 rule. Many other technicalities make these situations difficult to resolve.
Another common challenge involves the 401(k) during a divorce. One spouse may be awarded 50 percent of the 401(k), but the submitted QDRO reflecting that outcome can then be rejected. Why? When one spouse contributed to the 401(k) before marriage and will continue contributing to that 401(k) following the divorce, the “50 percent” of the 401(k) is less straightforward. When the QDRO is submitted, a plan administrator needs to see calculations that reflect the length of the marriage as it relates to the length and amount of contributions. In some divorces, yes, the 401(k) may be split 50-50, but the account will be distributed equitably based on specific QDRO calculations. Pensions can also be very complicated. A judge may award 50 percent of a monthly pension to the wife, but if the account is empty, the pension is only a promise to be paid. Alternatively, the wife is awarded $100,000 out of the pension. These are just three examples of many possibilities which highlight the need to understand various negotiating terms to create a successful QDRO submission. With so many variables at play, one small mistake or one question not asked can be incredibly costly.
–Judge Stephen Hernsberger
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