QDRO is an acronym for “qualified domestic relations order.” If you file for divorce in New York and one spouse has a retirement plan through their workplace, a QDRO provides the other spouse with the right to receive a specified percentage of the payable benefits.
A QDRO can be applied to various types of retirement plans, including but not limited to those described below.
Defined contribution plans
With this type of plan, the participant (employee) contributes to the fund. In some cases, the employer does too. Unlike pensions, they don’t pay out a guaranteed amount after you retire. Instead, you can access the money after a certain age and use it to fund your retirement. Common examples include SEP accounts, 401(k)’s, and profit-sharing plans.
Defined benefit plans
Defined benefit plans are like traditional pensions in that they pay you a set monthly amount after you retire. Depending on how the plan is structured, they can provide additional benefits such as:
- Pre- or post-retirement death benefits
- Early retirement benefits
- Single life annuities
- Joint and survivor annuities
Premarital retirement plans
If you had an SEP account or 401(k) before getting married, the money accumulated up until then is your separate property and not subject to division upon divorce. Where it gets complicated is when the plan appreciates in value during the marriage. A financial expert may have to calculate which portion of your plan remains your separate property and which portion is part of the marital estate.
You and your spouse can negotiate how any benefits will be divided, or a court can do it for you using a set formula. Once you have been granted a portion of your ex-spouse’s retirement benefits, your attorney will help you obtain the QDRO and present it to the pension administrator so that you can be recognized as an alternate payee. When it’s time for payments to start, your claim will ensure that you get your share.
When dividing retirement benefits, it is critical that you work with a New York divorce attorney who is familiar with your options. If you don’t specifically identify the benefits you are seeking in the separation agreement, the QDRO issued by the court will not include them, and you could lose out on important options like survivor benefits.
Dividing retirement accounts in a New York divorce can be complicated, especially if the plan was in effect before the marriage, but an experienced divorce attorney will guide you through the process and ensure that you receive the benefits that you are entitled to under the state equitable distribution law. Jayson Lutzky is a Bronx, New York divorce lawyer who offers free initial in-office consultations. He has helped many clients over the past 36 years in contested divorces as well as contested divorces. If you have any questions about how your pension may be affected by divorce, then call his office at 718-329-9500 to set up a free in-person consultation.