What is a QDRO and How can it Benefit Me During a Divorce?
A Qualified Domestic Relations Order, or QDRO for short, is a court ordered evaluation of retirement accounts. A majority of contested divorces, especially contested cases or those involving children or maintenance, will need an evaluation of retirement benefits. QDROs are often used to ensure equitable distribution during settlement negotiations and proceedings. The types of benefit packages included in these evaluations include 401(k)s, 403(b)s, and workplace pension plans, but not IRAs.
A spouse who has been supported by their partner during their marriage, such as a stay at home parent, or a spouse who earns less than their ex, is entitled to part of their former flame’s retirement benefits. More times than not, a spouse who is refusing to abide by court orders by failing to make child support or maintenance payments will have the payments deducted from their retirement funds. This is where a QDRO is crucial because it allows both parties, as well as the court, to see exactly how much each person has saved for retirement, and if they can actually afford to make ordered support payments.
In instances where a spouse is failing to make support payments, a judge can order that the non-money making spouse receive a certain percentage of money from their ex’s retirement fund. According to an article published on the Forbes website, this is done by issuing a lien on your ex’s retirement account. A lien is a right to keep possession of property (in this case, retirement funds) belonging to another person (your ex) until that person’s debt is paid. Jeff Landers, the article’s author, explained the lien by saying, “the divorce settlement agreement would specify that a certain dollar amount or percentage of the retirement plan would be assigned via QDRO to you, the recipient spouse, as part of equitable distribution. The remainder would stay ‘as is,’ for your ex-husband. The settlement agreement would also provide you with a security interest – the ‘lien’ (via QDRO) – in your [ex’s] remaining share to secure his obligation to you.”
The benefits of QDROs are far reaching, but it is crucial to make sure they are completed at the right time. Bari Weinberg, an attorney in New Jersey, warns that if you are planning on using the QDRO as part of equitable distribution, then the evaluation must be completed prior to the settlement or judgment. Pension and retirement evaluations have strict guidelines that must be followed, and trying to handle the complicated financial aspects of contested divorce without counsel is not recommended. Matrimonial attorneys, including those at Brian D. Perskin & Associates, are familiar with QDROs and the important role they play in divorce cases. By contacting the firm, whether in the beginning stages of your divorce or in the middle of complex litigation, you are protecting yourself from an unjust settlement. Call 718-875-7584 or 212-355-7584 to discuss your case with an attorney today!