Addressing the multiple aspects of divorce can be overwhelming. One part you should not ever skip is the Qualified Domestic Relations Order (QDRO). This court order outlines the division of retirement plans between you and your spouse.
If your current attorney does not handle QDROs, it might be tempting to find an online template and try to finish the job yourself. However, a pro se or self-filed QDRO is a gamble that puts your financial future at stake.
The problematic one-size-fits-all approach
Online templates may be convenient, but they do not address the unique circumstances in your life. Additionally, the ones you find on the internet may not comply with federal laws and specific plan requirements. By using these, plan administrators can reject your QDRO due to the lack of necessary language.
The risk of losing survivor benefits
In New York, survivor benefits are considered marital property subject to equitable distribution. However, they must be part of the QDRO that a plan administrator approved to be enforceable. Failing to explicitly designate yourself as the surviving spouse for death benefits can cause payments to cease upon the participant’s death.
The unexpected tax penalties
While a do-it-yourself (DIY) approach for QDROs can be convenient, it can come with significant costs. Errors in a DIY QDRO can lead to unintended tax consequences, such as failing to facilitate a direct rollover into an IRA.
Why legal counsel is critical for QDROs
QDROs are an area of divorce that requires precision. Handling this by yourself can jeopardize your future. Seeking advice from an attorney who understands the nuances of laws involved in QDROs is wise.