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QDRO 101: BASIC INFORMATION RELATING
TO QUALIFIED DOMESTIC RELATIONS ORDERS


The laws relating to employment benefit plans and qualified domestic relations orders may initially seem somewhat intimidating. We believe that this stems, in large part, from unfamiliar terminology and the relative obscurity of ERISA, which is the primary source of law relating to the drafting, issuance and enforcement of QDRO's. The following questions and answers are intended to simplify matters for you. We hope that this brief discussion of basic QDRO law is useful and guides in preparing your QDRO form

Why is a Special Type of Order Required to Distribute Pensions and Other Types of Retirement Plans?

The necessity of using a QDRO form to divide pensions, profit sharing plans, and 401k plans in divorce results from certain provisions that are contained in a federal law known as the Employment Retirement Security Act (ERISA). Until 1984, two provisions in ERISA raised questions as to whether a state court could even issue an enforceable order for the distribution of retirement benefits. These two provisions were ERISA's (a) preemption provision, which made regulation of retirement plans a mater of exclusive federal interest; and (b) spendthrift provision, which restricted a plan participant's ability to assign his or her benefits under a pension plan covered by the act.

Because of concerns that ERISA's spendthrift and preemption provisions affected the validity of state court DROs, Congress enacted the Retirement Equity Act of 1984 to exempt QDRO's from those provisions. Congress provided that the spendthrift provision "shall not apply if the order is determined to be a qualified domestic relations order [QDRO]." Consistent with this language, Congress added an exception to the express ERISA preemption provision, stating that the preemption provision "shall not apply to [QDROs] " Under a QDRO, an alternative payee is treated as a plan beneficiary.

A DRO is "qualified" if it "creates or recognizes the existence of an alternate payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan." The QDRO provisions define "alternate payee" to mean "any spouse, former spouse, child, or other dependent of a participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under a plan with respect to such participant."

Are Pension Plans, Profit Sharing, 401k's and other Plans Subject to Distribution in Divorce by virtue of State Divorce Laws?

Yes.  Regardless of whether you live in a community property state (for example, California) or Equitable Distribution (also known as "common law") state, such as New York, the marital portion of a retirement plan is distributable in a divorce case. State laws which define what types of property are marital, and thus subject to division in a divorce, are not preempted by ERISA. However, the ERISA preemption does limit the mechanism by which a state may achieve such division. This limitation is precisely why the distribution of plans covered by ERISA entails qualified domestic relations orders. In all jurisdictions, the marital portions of pensions and other types of 401K plans are presumptively subject to division in divorce. Each year, tens of thousands of qualified domestic relations orders are approved by plans and issued by state divorce judges. If a state-specific QDRO sample is used for guidance. A valid QDRO form can be prepared quickly and easily.

What are the Legal Restrictions on the Language and Provisions that May be Included in a QDRO Forms?

There are very clear limitations on what provisions may be included in a QDRO Among other limits a QDRO may not impact on the method of calculating benefits due. See Mackey v. Lanier Collection Agency & Serv., 486 U.S. 825, 829-30(1988). The legitimate purpose and scope of a QDRO is to divide the benefits between the two spouses. Under no circumstances may it increase or decrease the amount of total benefits payable (determined By actuarial value) by the benefit plan or alter the method by which the total amount of retirement benefits are calculated.

Is there a Way to Compensate the Non-Participant Spouse for the Marital Portion of a Pension Plan Without Using a QDRO?

Yes.  It is possible for the plan participant to receive his or her entire pension and the alternate payee (spouse) to receive an offsetting share of another marital asset. However, although this approach would spare the parties the difficulty and expense of preparing a QDRO form, it would entail other complications. For example, expert valuation would be required to ascertain the present value of the pension rights. Second, the offset method is only viable where there are other, divisible assets that can be used to give the alternate payee sufficient consideration for the value of the pension benefits that he or she would otherwise receive if a QDRO were issued. The complexities associated with ascertaining a retirement account's present valuate, and the necessity of finding other marital assets that are sufficiently value for the offset present complexities and difficulties that, in general, lead courts and parties to select a QDRO.

What are the Required Elements of a QDRO?

In order for a document to be considered a valid qualified domestic relations order under ERISA, it must meet the following basic elements:

*Must be a judgment, decree or order, including one that approves the parties' marital settlement agreement;

*Must relate to marital property rights (equitable distribution/community property), spousal support, or child support;

*Must be for the benefit of a spouse, former spouse, child, or other dependent;

*Must be made pursuant to a state domestic relations law.

Can a Separation Agreement, Standing Alone, Constitute a QDRO?

Although a separation agreement may form the basis upon which a QDRO is entered, the agreement, standing alone, is not a QDRO. Thus, if you have entered into a separation agreement providing for the division or distribution of a benefit plan governed by ERISA (e.g. pension plan. 401k. profit sharing, savings plan, etc.) it is imperative that you act quickly to ensure that it is incorporated into a domestic relations order. It is

What Information Must be Contained in A QDRO Form?

By selecting one of the professionally prepared QDRO Form Samples that are available for download via the forms menu of QDROpedia.com, you get everything you need to quickly prepare a QDRO for a pension, 401K, profit sharing, savings plant, or similar retirement account. We provide you with a user-friendly process, with step-by-step instructions to fill in blanks.

Some of the information that you will generally need for your QDRO form includes the following:

*Name and last known mailing address of the participant and the alternate payee;

*Amount of percentage of benefits to be paid to the alternate payee, or the manner (formula/equation) by which the amounts payable to the alternate payee are to be determined;

*The number of payments and/or marital period to which the order applies;

*Name of the Plan to which the Order applies (for example: ABC Pension Plan or XYZ 401k).


Depending on the type of plan that you are dividing and the options that you select for your form, further additional information may be required. Because all of QDROpedia.com's QDRO forms are in MS Word format, you can easily modify the forms to suit your individual priorities and needs, in the privacy of your home or office.

We are the largest and most trusted provider of QDRO forms in the United States. Each year, QDROpedia.com provides more than 4,000 easy-to-use QDRO forms to litigants, attorneys and courts throughout the United States.

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If you have questions or require further QDRO information, contact us today: ph (212) 382-0060
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