One of the final steps of property division pursuant to a divorce is to transfer all or a portion of one party’s retirement into the name of the other party, if applicable. Depending on the type of retirement asset, this is done pursuant to a Qualified Domestic Relations Order (“QDRO”).
A Qualified Domestic Relations Order is used to divide retirement and pension plans. You cannot simply transfer a retirement account from one spouse to another under most circumstances without triggering adverse tax consequences. A Qualified Domestic Relations Order avoids those adverse consequences. Because these types of plans are unique and complex, special attention must be given to comply with regulations under the Employee Retirement Income Security Act (“ERISA”).
There are prerequisites involved to prepare a Qualified Domestic Relations Order. First, before a Qualified Domestic Relations Order can be prepared, there must be a Final Decree of Divorce. The Final Decree of Divorce will provide the share of the applicable retirement that each party is awarded pursuant to the property division. Once there is a Final Decree of Divorce, one of our experienced attorneys at Smith-Weiss Shepard Kanakis & Spony, P.C. will prepare a draft Domestic Relations Order, which will be submitted to the plan administrator, who manages the applicable retirement plan, for review. Upon approval of the Domestic Relations Order by the plan administrator, it then becomes a Qualified Domestic Relations Order. Thereafter, both ex-spouses will sign the Qualified Domestic Relations Order and it is sent to the court for approval. Finally, after the court approves the Qualified Domestic Relations Order, a certified copy is provided to the plan administrator for processing and implementation.
Effectuating the property division pursuant to a divorce is a complicated process with special attention required for the Qualified Domestic Relations Order. Smith-Weiss Shepard Kanakis & Spony, P.C. can assist you and ensure that your retirement benefits have been properly divided.