When determining the division of pension income in a divorce proceeding, perhaps the most relevant documentation is Qualified Domestic Relations Orders. A QDRO is defined as an order that creates or recognizes the existence of an alternate payee’s rights to receive (or assigns the right to receive to an alternate payee) all or a portion of benefits payable under a retirement plan.
This type of order can involve all types of pensions, including 401(k) accounts (an account with a defined contribution), or pensions with defined benefits of an average of a certain amount determined by a set formula. The bottom line is this: these pensions have to be divided during a divorce, and the process can be quite in depth.
QDROs can be complicated and encompass a lot of information. They can be challenging to prepare and can, if prepared improperly, contain mistakes that need correcting, resulting in wasted time, energy and money. Whether you’re in the position of the payor or the alternate payee, it is important to understand these orders and ensure they are prepared correctly the first time. QDROs can be prepared at the time of divorce, or many years later.
A competent attorney can help either side of a QDRO situation. They will ensure the accuracy of the order to save time and money, they can protect the payor from having to pay excess amounts and, if they’re representing the person seeking the pensions, they will ensure the payee receives the maximum amount possible. They can answer the questions you may have.