Frequently Asked Questions About QDROs

What is a Qualified Domestic Relations Order?

A Domestic Relations Order 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 to a Participant under a retirement plan.

Orders relating to these non-ERISA Plans are not "Qualified" and are simply called Domestic Relations Orders.

Why are QDROs so difficult?

  • Every plan is different and may contain different benefits, survivorship options, terms and procedures for administration and are constantly changing.
  • Divorce actions have so many issues that attorneys simply has no time to become familiar with the highly technical concepts of ERISA and state retirement laws.

Can QDROS be used to get alimony or child support?

Yes. Depending on the specific Plan, it may be possible to get the money out of the plan right away and in a lump sum.

What is a Defined Benefits Plan?

Benefits are generally determined using a formula based on years of service and salary (often an average salary).

What is a Defined Contribution Plan "DC" Plan?

The participant and/or employer may both contribute. Amount of contributions may vary. Tax deferred until distribution. May include 457 plans (such as New York State Deferred Contribution), 401(k) plans, 403(b) plans, money purchase plans, employee savings plans.

What is the "Shared Interest Approach" to dividing an ERISA plan?

The "Shared Interest Approach" provides that:

  • Payments to the Alternate Payee cannot begin until the Participant chooses to retire and begins to receive a retirement allowance.
  • Payments to the Alternate Payee must end upon the Participant's death except under certain circumstances.

What is the "Separate Interest Approach" to dividing an ERISA plan?

Under this approach, a "separate interest" is carved out for the Alternate Payee and adjusted to his/her actuarial life expectancy.

What is the accrued benefit? And why is pension valuation so tricky?

The accrued benefit is extent of the Participant's plan benefits calculated as of a certain date. This may be calculated as of the date of the commencement of the action for divorce, but the value of those benefits accrued during the marriage will change as the Participant continues to accrue salary and service.

Contact Our Firm With Your Questions

Many people don't understand full well the financial impact of a divorce. If a QDRO is not done correctly, a spouse may be left with a greatly reduced benefit or no benefits at all. Or a Participant may be forced to pay more than his or her equitable share.

The Law Office of Carolyn D'Agostino, PLLC, in Clifton Park, offers answers to QDRO FAQs and guidance throughout New York: Call 518-982-5229 or send our lawyer an email.