QDRO and DRO Preparation

QDRO and DRO Preparation

QDRO and DRO Preparation

Retirement assets often represent a significant part of marital property, and their division requires precise legal documentation. Our QDRO and DRO preparation services ensure that your retirement benefits are accurately divided and legally secured post-divorce. This includes preparing and filing the necessary legal orders to enforce your rights. 

With our extensive legal expertise, we handle the complexities of retirement asset division, ensuring your interests are protected. For reliable and meticulous preparation of your retirement plan orders, contact our expert team.

QDRO Preparation

The QDRO Issue

For parties to a a dissolution of marriage or legal separation, the retirement plan may be the single most important marital asset.

Over 150 million Americans are covered by ERISA, military, and civil-service employee benefit and Pension plans. These plans contain well over 8 trillion dollars. Pension rights are usually a divorcing couples largest or second largest asset (the other being the family home). Therefore, they are extremely important to employees and their families as a source of income and security.
Why a QDRO is Necessary

Division of marital property is generally governed by state domestic relations law. The state family law court enters its Judgment which divides and awards retirement benefits earned during the marriage between the spouses. However, because federal law regulates pension plans, the Judgment itself is rarely legally sufficient to allow the parties to receive their respective interests from the plan administrator of the retirement plan. A separate order called a "Qualified Domestic Relations Order" (QDRO) will usually be necessary to provide for the actual payment of plan benefits to the parties.

Why Pension Plans are Regulated by Federal Law

Prior to 1974 private pension plans were not regulated by the federal government and only sporadically regulated by the states. Common problems of this era included a lack of disclosure to employees about their pension rights, inequitable conduct by employers, impoverishment of elderly employees by the bankruptcy of their employers, and other abuses. Many employers reserved the right to terminate pension payments if their former employees did or said anything perceived to be against the interests of the employer after retirement. Employees eligible to receive a pension after forty years of loyal service could be fired a month, or even a single day, before their fortieth anniversary and receive nothing.

During this period state courts afforded no special treatment to pension plans domestic relations cases. Spouses involved in a divorce with an employee eligible to receive a pension commonly lost their right to share in those pensions.

Seeking to put an end to these abuses, in 1974 Congress enacted the Employee Retirement Income Security Act (ERISA) to provide a variety of protections for employees and their pension rights. In 1984 Congress amended ERISA by enacting the Retirement Equity Act (REA) which sought to clarify the way State Domestic Relations laws and ERISA should interact with each other.

A Few Retirement Plan Basics

Defined Benefit Plans

These Plans are typically employer funded and provide an annuity of monthly payments to the participant when he or she retires (similar in many ways to social security). The amount of the pension that the participant receives is based upon when he or she retires, their age, years of service, salary, among other factors. Risk of investment performance is entirely upon the employer. This is the reason why we continue to see a decline in the number of Defined Benefit Plans.
Defined Contribution Plans

These Plans create individual accounts for each participant and provides benefits based solely on the amount contributed to that participant`s account, together with earnings thereon. These are plans such as 401(k)s which require an employee to direct his or her own investments, and may allow plan loans to the participant or allow withdrawal of funds where financial hardship can be shown.
Whether or not these pension plans are sufficient to meet the needs of the parties when they retire solely depends upon how well they manage/invest their retirement account. Said another way all of the risk for plan performance is on the employee. This is the reason why Defined Contribution Plans are becoming the norm.

We are also available to assist individuals with professional advice and management of their investments "rolled over" from pension plans awarded to them in divorce proceedings. We offer an alternative fee arrangement for QDRO services where assets are placed under our management. (Please call us for details)

Both Parties Need to Get it Right the First Time

For the participant spouse, there are concerns over the depletion of hisor her accrued benefit or account balance-as well as the need to provide protection for a future spouse and/or children.
For the non-participant spouse, the assets at issue may be the only source of retirement income in addition to social security. Moreover, if the non-participant spouse is no longer a beneficiary of an insurance policy on the participant`s; life, the non-participant`s right to survivor and/or death benefits payable under a retirement plan must be secured.

In either case, both parties need to be confident that the division is done accurately and that their rights under the plan are fully protected. This can only be accomplished by an individual with a thorough understanding of the retirement plan involved and the laws governing retirement plans and QDROs.

Proceeding without this thorough understanding can be detrimental to either party by causing an improper allocation of benefits, loss of rights under the plan, or total or partial loss of benefits upon the death of the participant.

QDROs present unique problems for parties to a domestic relation proceeding. It is therefore essential that their attorneys possess highly specialized knowledge. This has led to QDROs becoming a sub-specialty area of law that lies at the intersection of family and pension law.
Your first step is the successful completion of the QDRO process. The second step is to invest your account wisely with professional investment management. We can assist you with both. 

We offer the following services to attorneys and non-attorneys:
  • Assisting attorneys with pertinent provisions in MSAs and Judgments.
  • Preparing, filing and serving "joinder" forms.
  • Preparing QDROs for all types of private retirement plans.
  • Preparing DROs and related court orders for governmental plans.
  • Submitting QDROs and DROs to plan administrators for pre-approval.
  • Negotiating provisions of QDROs and DROs with plan administrators.
  • Advising individuals with respect to retirement plan financial issues.
  • Investment advice and management.
FEE SCHEDULE - Available upon request

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