Serving Rome, New York residents with legal issues

What is a QDRO, and do you need one for your divorce?

by | Apr 1, 2019 | Property And Asset Division

Every part of divorce is complicated, and each party must abide by numerous rules. Failing to complete the process properly can result in a negative outcome for one or both spouses. One such area is the division of marital property. It often comes with much contention and requires transparency and compromise.

Remember that any asset either of you gain during the marriage becomes community property, including retirement benefits. However, in order to receive the benefits from your ex’s plan, you must file a Domestic Relations Order.

What is a Domestic Relations Order?

Although retirement accounts may qualify as marital property, they do not automatically go to both spouses in the divorce process. It takes another step to inform the retirement system whom to pay out benefits when the time comes. This is where a DRO comes into play. Once the document obtains approval, it becomes a Qualified Domestic Relations Order.

Without it, one spouse will not have access to the other’s pension directly. However, if the court mandates a split, the retired spouse will have to make direct payments to the other. Another option is to have a professional valuate the pension plan so the non-participating spouse can receive an asset of equal value instead.

How much does each spouse receive?

The amount you each have claim to depends on the calculation you use. A common one is the Majauskas formula, which is the number of credits the spouse earned during the marriage divided by the total number of credits earned throughout employment, then multiplied by 50 percent. For example, if you earned 10 credits while married and 20 total, then your spouse would receive 25 percent (10 ÷ 20= 0.5; 0.5 x 50=25). However, the court does not have to use this formula and may choose the percentage by other means.

This is only the basic structure of the DRO process. The steps and outcome may be different based on the pension plan and other circumstances.