Hire me to prepare your QDRO Experienced Knowledgeable Professional
Often in a divorce or legal separation the largest asset accrued by the parties during their marriage is their retirement plan benefits. As a marital asset, it is most often necessary to divide it between the parties in order to create an equitable division of the marital property. Many people are caught unaware at the completion of a divorce or legal separation that a qualified domestic relations order, or QDRO, is required to formally implement the award to themselves or their former spouse of a portion of the retirement benefits accrued during the marriage. This is very common as no one except a person who has needed a QDRO before, or an attorney such as myself who prepares them regularly, has a reason to have heard of them. Typically when a client calls me to discuss preparation of their QDRO they have only just recently heard the term. In addition to being unfamiliar with what a QDRO is and why it is needed, most people have no reason to know of the QDRO's interaction with the federal tax code and the underlying complexities involved in properly drafting such a division order so that the person who receives the retirement benefit is the person who ultimately pays the taxes associated with it.
Although QDROs are defined under the Internal Revenue Code, the retirement plan administrator for each plan has a great deal of flexibility in creating its own internal plan rules establishing which plan benefits may be divided by QDRO and the procedures to be followed in preparing and submitting such an order to divide the participant's benefits under the plan. To further complicate the issue, state and federal governmental retirement plans are exempt for the QDRO provisions that govern private retirement plans and, therefore, have their own completely separate laws and rules which govern their division. As you are beginning to understand, the area of QDRO law has a lot of moving parts and can be a bit complex. It is because of the flexibility granted by law to each retirement plan administrator, and the broad source of laws governing the many different private and governmental retirement plans that such a geat deal of diversity exists between the plans as to the format, provisions and rules relating to preparing and processing a QDRO. Although there are many similarities between the many retirment plans in dividing the benefits of their participants, each plan has its own unique rules and procedures. QDRO law can be hyper-technical, overwhelming and full of opportunity for mistakes. Because of the potential complexity involved in properly preparing and processing a QDRO, it is also not uncommon for divorce attorneys to hand off QDRO preparation to another attorney, such as myself, who specializes in this area in order to ensure the client's rights and benefits are safeguarded to the fullest extent possible. In this situation your divorce attorney is able to focus his or her full attention on the law relating to the processing of your divorce, while I focus my full experience and knowledge on properly preparing your QDRO and ensuring you receive all of the benefits to which you are entitled.
Are you in need of a ... QDRO COAP QCO RBCO QDO ?
There are a couple of basic facts everyone needs to understand about QDROs. First, retirement plans are defined under either state or federal law, and the benefits from the retirement plan to the plan participant are tied to that individual participant. So any benefits distributed from a retirement plan are taxed to the individual participant under the plan. For example, when a person takes a distribution from their 401(k) plan, they are personally taxed on that distribution. Similarly, when a person receives their monthly pension check, that person pays taxes on that monthly pension payment. A QDRO is the legal mechanism by which a portion of the benefits of a retirement plan are awarded to someone other than the retirement plan participant (referred to as the alternate payee) and the related taxes associated with the awarded benefits are also attributed to the recipient of the award rather than the retirement plan participant. The QDRO ensures that the party who actually receives the distributed retirement plan funds is the party who pays the resulting income taxes.
Second, the division order required to divide your retirement account isn't always referred to as a qualified domestic relations order (a/k/a QDRO). What the division order is actually called depends on the federal or state laws that create and define the retirement plan. For example, the Federal Employees Retirement System, which is administered by the federal Office of Personnel Management (a/k/a OPM), utilizes what it defines as a court order acceptable for processing, or COAP. There are many different retirement plans with many different names for their respective division orders, however, for simplicity I generically use QDRO when discussing the division order with clients, other attorneys, and on this webpage. Although many legal professionals and individuals generically refer to any retirement account division order as a QDRO, the retirement plans' administrators can be very strict in their requirement that we refer to their respective division order by whatever designation their rules assign to it. Expanding on the previous example, if you submit a division order to OPM to divide a FERS plan, and label the division order as a QDRO, the division order will be rejected immediately. There is a legal basis for this immediate rejection by OPM, which I will not go into at this time, but in the end your division order is still rejected and no award is processed.
Keeping the above basic facts in mind, below are the answers to additional frequently asked questions relating to QDROs.
Frequently Asked Questions
A "qualified domestic relation order" (QDRO) is a domestic relations order that creates or recognizes the existence of an alternate payee's right to receive, or assigns to an alternate payee the right to receive, all or a portion of the benefits payable with respect to a participant under a retirement plan, and has been determined by the relevant retirment plan administrator to be a QDRO.
NOTE: It is the plan administrator that makes the final deteremination as to whether a domestic relations order issued by a state court, or other entity with jurisdiction, is in fact a qualified domestic relations order acceptable to the retirement plan.
A "domestic relations order" (DRO) is a judgment, decree, or order (including the approval of a property settlement) that is made pursuant to state domestic relations law and that relates to the provision of child support, alimony payments, or marital property rights for the benefit of a spouse, former spouse, child, or other dependent of a participant under a retirement plan.
A state authority, generally a court, must actually issue a judgment, order, or decree or otherwise formally approve a property settlement agreement before it can be considered a domestic relations order under ERISA. The mere fact that a property settlement is agreed to and signed by the parties will not, in and of itself, cause the agreement to be a domestic relations order. Further, retirement plans are neither permitted nor required to follow the terms of domestic relations orders purporting to assign retirement benefits unless they are determined by the Plan Administrator to be a qualified domestic relations order.
NOTE: First a state court issues or approves a DRO, then a retirement plan administrator reviews the DRO and determines if it is actually a QDRO.
A domestic relations order may be issued by any state agency or instrumentality with the authority to issue judgments, decrees, or orders, or to approve property settlement agreements, pursuant to state domestic relations law. Most often, this is the state domestic court with jurisdiction over divore and child custody matters.
A plan participant is the individual who is actually participating under the retirement plan and accruing benefits. In other words, it is the person who owns the benefits under the retirment plan. An alternate payee is the person under the QDRO who is being awarded a portion of the retirement plan benefits of the plan participant as marital property or child support.
This is a complicated question with a lot of moving parts. Drafting and processing a QDRO involves issuance of a court order dividing the retirement plan between the parties, gathering the necessary information from both parties, communicating with the plan administrator to ensure a complete understanding of the plan's QDRO procedures, drafting the QDRO itself, processing it through the court and finally submitting it to the retirment plan admininstrator for review and implementation. There can be many hurdles along the way that may slow the process. However, if everything falls into place it is not uncommon for the QDRO process to be complete in 30 to 60 days.
The simple answer is, no. Certain types of retirement accounts are excluded from the QDRO provisions of the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC). State and federal government retirement plans are one such example. However, although state and federal government retirement plans are excluded from the QDRO provisions of ERISA and the IRC, the state and federal laws that created such plans require that QDRO-like orders are prepared and qualified by the respective retirement plan administrators in order to divide the plan participant's benefits. This is the source of the various different names, other than QDRO, for retirement account division orders referenced on this webpage. For example, a federal civilian employees pension is divided by an order called a "court order acceptable for processing" (COAP). Whereas the Oklahoma Teachers Retirement System refers to its division order as a "qualified domestic order" (QDO). However, the Oklahoma Public Employees Retirement System refers to its division order as a QDRO. Although the division orders are called many names other than QDRO, their necessity and purpose are same. On this webpage, and often in conversation, the term QDRO is used to generally refer to any and all retirement account division orders. However, when you are submitting a division order to a plan administrator to divide a specific plan, you are required to reference the exact laws governing division of the plan assets and call the division order what the plan's rules require it to be called.
No. The retirement plans themselves are allowed to create many of their own rules in order to fill in the details of division of the plan's assets that are not addressed in the controlling laws. There can be many similarities between QDROs targeting different retirement plans. But, there can also be vast differences. You need to be aware of all of the benefits under the plan to be divided, which of those benefits can be divided, what are the acceptable methods of division and in what format is the plan administrator expecting to receive the division order for processing.
Let me give you the quick answer, sometimes, yes. Now, if you are still reading then you are probably the type of person who understands that dividing your retirement account, or ensuring that you receive your full share of your former spouse's retirment account as awarded by the court, is a very important matter. I will not tell you that you must hire an attorney like me to handle your QDRO matter. You can certainly attempt to navigate this process on your own. However, the area of dividing retirment accounts via QDRO or other QDRO-like order can be very complex and overwhelming. Further, you will notice in any form or written QDRO material that your plan administrator provides to you some version of the phrase, "this is not legal advice and if you have questions regarding your QDRO you should seek the advice of an attorney." Plan administrators will not take on the responsibility of providing their plan participants advice as to their legal rights and benefits when dividing their retirement accounts. It is worth having someone with my experience and knowledge assist you with your QDRO matter to ensure you receive every benefit to which you are entitled and that the QDRO is processed correctly the first time. Remember, at its heart, a QDRO is a court order that is reviewed by a retirement plan administrator and found to be qualified, thus acceptable to the plan for implementation. Because it is an order issued by the court, you cannot simply fill out a form and submit it to the retirement plan administrator.
It is the administrator of the retirement plan that provides the benefits affected by an order that is the individual (or entity) initially responsible for determining whether a domestic relations order is a QDRO. Plan administrators have specific responsibilities and duties with respect to determining whether a domestic relations order is a QDRO. Plan administrators, as plan fiduciaries, are required to discharge their duties prudently and solely in the interest of plan participants and beneficiaries.
NOTE: First, the state court with jurisdiction issues the DRO. Then, second, the DRO is submitted to the plan administrator for deteremination as to whether it is a QDRO, and thus acceptable to the retirment plan for processing and implementation.
One of the effects of a QDRO is to assign the potential tax liability on the retirement benefits being awarded to a former spouse, to that former spouse. For example, if your former spouse is awarded $10,000 from your 401(k) account, and you simply take an early distribution from your 401(k) account and hand it to your former spouse, the 401(k) plan will report to the IRS that you took a distribution of $10,000 during the year. You must then claim that 401(k) distribution on your income tax return and pay taxes on it as ordinary income. However, if your former spouse receives the $10,000 directly from your 401(k) account through a QDRO, then the 401(k) plan will report to the IRS that your former spouse received the $10,000 distribution and they will have to claim it on their income tax return and pay the associated taxes.
NOTE: This example is simplified to illustrate the basic point.
Retirement Plans (not a complete list)
Federal Employees Retirement System
Civil Service Retirement System
Thrift Savings Plan
Oklahoma Teachers Retirement System
Oklahoma Public Employees Retirement System
Oklahoma Law Enforcement Retirement System
Oklahoma Firefighters Pension Retirement System
401(a), 401(k), 403(b) & 457 Plans
Non-Governmental, Private Pension Plans
Oklahoma City Employees Retirement System
Oklahoma Police Pension & Retirement System
I can correctly quickly reliably consistently prepare your retirement account division orders!
No matter what type of retirement account you need to divide, I have the knowledge and experience required to prepare the QDRO or other division order and provide the retirement plan with everything it needs to process the award.
Types Of Division Orders
Qualified Domestic Relations Order (QDRO)
Court Order Acceptable for Processing (COAP)
Qualifying Court Order (QCO)
Retirement Benefits Court Order (RBCO)
Qualified Domestic Order (QDO)
Domestic Relations Order (DRO)
A "qualified domestic relations order" (QDRO) is a domestic relations order that creates or recognizes the existence of an alternate payee's right to receive, or assigns to an alternate payee the right to receive, all or a portion of the benefits payable with respect to a participant under a retirement plan.
Kenneth T. McConkey
Oklahoma QDRO Attorney
I have assisted individuals and family law attorneys across the State in the preparation and successful processing of QDROs for the past several years. I have extensive experience with dividing governmental and private retirement plans. Family law attorneys routinely engage my services as a QDRO expert to support their divorce clients in the review of QDROs prepared by opposing parties, and to testify as an expert witness regarding disputes relating to the proper form of the QDRO to be entered and submitted to the retirement plans for processing. Whether you are an individual in need of an attorney to process your QDRO, or you are a family law attorney in need of QDRO-specialized experience and knowledge to support your client, I have the skillset to meet your needs. For additional information regarding my background and experience, please click HERE to visit my personal WEBPAGE.