QDROs & FAQs
Focus on QDROs
A major focus for this law firm is on the particular area of law governing divisions of retirement account assets and benefits between divorcing or divorced spouses. The legal instrument to transfer such assets is often called a
QDRO, short for Qualified Domestic Relations Order, although it has different names depending upon what type of retirement plan is at issue.
This firm’s QDRO clients include individuals who need QDROs or who need help with a QDRO presented to them, and other lawyers with clients who have QDRO issues. Our individual clients who are in the process of divorce have other lawyers handle their divorce proceedings, as we limit our focus in family law to QDROs. See below for services for attorneys and information for plan administrators.
Following is a list of frequently asked questions about QDROs:
A QDRO is a court order issued during or after a divorce to divide marital property retirement assets between spouses. QDROs are directed at retirement plan administrators, telling them what to do with affected plan assets. Sometimes QDROs are used as a method to help an ex-spouse to meet child or spousal support obligations, or as a method of enforcing support orders. More specifically, a QDRO is:
- a court-issued domestic relations order (or DRO),
- directed at a retirement plan administrator,
- relating to a property division in a marital dissolution (a divorce), or a support order,
- that divides retirement assets, and
- is deemed qualified (‘Q’DRO) by the retirement plan administrator if it meets the requirements of both applicable law and the plan’s particular rules.
In some cases, part of a marital dissolution order (divorce decree) creates a division of retirement assets; in others, the court will issue a separate QDRO. Often, a divorce decree will mention a division of retirement assets and incorporate a stand-alone QDRO by referring to it.
It is always preferable to have a separate, stand-alone document as a QDRO for each retirement plan, as this helps keep plan administrators from becoming confused, distracted, or annoyed by having to read through the minutia of a divorce settlement having nothing to do with the QDRO before they can figure out what the order says about what they must do.
For divorcing or divorced spouses, a QDRO can assign all or a portion of a retirement benefit earned by one spouse during a marriage, along with the tax liability for it, to the other spouse. QDROs have the effect of redistributing earned benefits and taxes due on them between spouses.
For QDROs issued to help an ex-spouse meet their child or spousal support obligation, a QDRO can direct the plan administrator (the group that manages the retirement fund, often a third-party company) to deduct support payments from a retirement benefit, including past due amounts, even if retirement pay isn’t yet due. For QDROs issued as enforcement mechanisms, an ex-spouse cannot avoid the effect of a QDRO by quitting their job, moving, or declaring bankruptcy. Child support QDROs do not transfer tax liability.
The spousal parties (and sometimes their children if affected by support issues), the parties’ divorce attorneys and one or more QDRO attorneys, retirement plan administrators, one or more courts, retirement plan sponsors, sometimes an independent actuary, and sometimes the federal Pension Benefit Guarantee Corporation, the PBGC, if the retirement plan runs into financial difficulty. (Plan administrators are usually third-party financial managers, in contrast to plan sponsors, who are usually employers, ex-employers, or unions. Plan sponsors contract with plan administrators to manage plan assets.)
In Washington, in most other states, and under Federal statutes, the law recognizes retirement benefits earned during marriage as marital property rather than as separate property of the employee-spouse. In a divorce, a court will divide marital property between the spouses, including retirement benefits. To divide most kinds of retirement benefits, a document called a QDRO is needed for each retirement account to be divided.
In many cases, retirement benefits are the single largest asset of a marriage, as large as or even larger than the value of the couple’s home. The ratio of the retirement benefit split between divorcing or divorced spouses is often 50/50, but not always, and depends upon all the facts and circumstances in each case.
Because retirement benefits often have more than one element, a basic benefit element is just one of several elements that a court will divide in order to address the value of the whole benefit. Additional elements may include early retirement subsidies, cost of living increases (COLAs), survivor and beneficiary designations, gains and losses, and other elements of a whole benefit.
In most cases, when retirement assets are to be divided in a divorce property settlement, or for child or spousal support, that division cannot be accomplished without a QDRO because of legal requirements governing the division of retirement assets, as well as the requirements of a retirement plan’s specific rules. If retirement assets are used to secure past-due post-dissolution support, whether voluntary or for enforcement of child or spousal support orders, retirement plans require QDROs for that purpose.
A court order dividing retirement plan assets between parties may be ‘qualified’ by a retirement plan administrator if it meets both of two conditions: (1) exacting legal requirements, and (2) a retirement plan’s specific rules.
The applicable legal requirements can vary depending upon the type of plan, with private employer plans usually governed by the federal law known as ERISA, and government retirement plans having different legal requirements. Retirement plan-specific rules vary on a per-plan basis.
A retirement plan administrator, and sometimes a judge with input from the affected plan administrator.
State laws give family court judges the power to effect a divorce and issue domestic relations orders (DROs) designed to be qualified as QDROs. Plan administrators are fiduciaries, and federal law gives private-plan administrators the duty and power to determine whether a court’s order affecting assets under the administrator’s control conflicts with the plan’s rules, as well as with applicable law, or is, in other words, a ‘qualified’ DRO with respect to that particular plan.
The same is true for federal government plans such as FERS. For public, non-federal ‘governmental’ plans (like state, county, and municipal plans), different state and local laws control how such plans’ assets may be treated, and administrators for those plans must abide by them.
Plan administrators determine what the language in a QDRO means as it pertains to the plan at issue, therefore, QDROs must be drafted with particularity so that nothing is left up to a plan administrator’s imagination, which can be capricious.
Further, as employers’ fortunes wax and wane, they tend to change their retirement plans’ administrators to save money, and when they do, the new plan administrator may interpret even the employer’s model QDRO in a novel way. When a new plan administrator takes over, institutional knowledge is lost — old records are often no longer available — and then an effort to determine the value of a retirement benefit at some time in the past in order to divide it can be extremely difficult, if not impossible. This is another reason why QDROs need to be done as soon as divorce is contemplated rather than waiting until sometime later.
The varying nature of plan administrators’ interpretations of QDROs is why general language in a dissolution decree or proposed QDRO such as
Spouse X gets 45% and Spouse Y gets 55% is not particular enough and is very likely to result in a plan administrator not qualifying the DRO, or worse, applying the language in a way that is not at all what the parties intended: was that percentage split supposed to apply to the entire retirement benefit, or only to the part accrued during marriage? What about the growth in value of that part earned during marriage? Or the part accruing before marriage? What about survivor benefits? What about early retirement subsidies and COLAs added to the benefit? There are many such important issues to sort out before a QDRO is drafted, and the language used to address such issues must be structured with particularity specific to the plan and applicable law.
Ambiguous, insufficient, or wrong language in a QDRO can create a nightmare scenario where benefits can be severely reduced or even lost entirely. For example, a plan administrator’s interpretation of an ambiguous QDRO may only be apparent after many years elapse since the QDRO was qualified, because reaching retirement eligibility age or status may occur decades after a divorce, or even years after someone dies, and trying then to go back and correct the unintended consequences caused by a QDRO’s faulty language can be impossible.
In some cases an ex-spouse owing support cannot make required payments, even though they really want to, because of losing a job or some other severe financial hardship. In such cases, it can be helpful to all parties to assign some of that ex-spouse’s retirement plan benefit to a child, children, or an ex-spouse in order to meet court-ordered support requirements.
A QDRO can be used to avoid the harsh consequences of not paying support, even for spouses who cannot yet collect retirement benefits on their own because they are still too young to be eligible for retirement pay. Child and spousal-support QDROs can be limited in time and amount to meet the need, and can prevent the hardship of pay garnishment for the spouse who cannot pay.
Ideally, as soon as divorce is contemplated and before support payment problems arise. If spouses are separated, the QDRO process should begin immediately, not only in order to address spousal property rights properly in the contemplated dissolution order, as broad or general language assigning benefits is almost never sufficient, but also to protect benefits from evaporating in the interim in the event of death or wrongdoing. QDROs are also possible if spouses are already divorced, but waiting until post-dissolution is not a good idea, as it can make things substantially more complicated and expensive for both spouses, and can result in spousal rights in retirement assets evaporating permanently. Do not wait to secure rights with a QDRO.
An actuarial valuation of a retirement plan benefit calculates the real value of the benefit so that an equitable distribution may be made, and it also informs the (ex)spouses, helping them understand exactly what they have. With any variety of deferred distribution plan like defined-benefit (traditional pensions), defined-contribution (401(k), 457, and 403(b)), or stock option plans, whole-benefit value is not usually or readily apparent to divorcing spouses, or their lawyers.
If a lump-sum payment is not on the table (or if the value of the benefit is not being used in an offset for other property); or if a plan benefit was earned entirely during marriage and the eligible retirement age is imminent, and a fractional benefit will be paid over the lifetimes of the parties; or if a marital fraction is used to apportion a defined benefit (and encompasses all parts of it) without regard to other property, then an actuarial valuation is probably not needed, otherwise, a valuation should probably be done.
Deferred distribution plan benefits need actuarial valuation when used in an offset calculation for other assets, or when only a portion of a benefit is divided and will not be subject to a marital fraction, because failure to properly assess the benefit value can substantially under or overestimate it by conflating present, future, and time value, in turn critically impacting equitable distribution between affected parties, and result in an unintended, highly skewed distribution arrangement. If such an error is discovered in time, and can be corrected, an actuarial calculation will be needed in any case to properly value the benefit.
An independent actuary, not only for their skills, but for their independence. An independent actuary’s calculations are usually preferable to a lawyer’s in order to assess the value of a retirement benefit in an unbiased fashion.
Lawyers can be very skilled with language, but many have a tendency to be math-challenged. Even for lawyers having the needed math skills, there is a conflict of interest presented when a lawyer does an actuarial calculation for a retirement benefit in a QDRO matter in which they represent one of the clients — because lawyers are also advocates for their clients, their calculations can be skewed in favor of their clients when there is wiggle room for interpretation.
To guard against bias, this firm uses independent actuaries selected by the parties to the QDRO. For the parties’ convenience, we can arrange for a valuation from an independent actuary you select. Fees charged for valuations vary between actuaries, and are paid by either of the (ex)spouses, or equitably split between them. Learn more about actuaries from the Society of Actuaries (SOA) or the American Academy of Actuaries, or search for an actuary at the SOA’s Actuarial Directory.
It depends upon the facts and circumstances of each case, but generally, from two to six months.
Q-dro (like cue-dro), qua-dro, or Q.D.R.O. (the initials), your choice.
About QDRO attorneys
Family law attorneys (divorce lawyers) have a broad focus, representing clients in divorce and other family-related matters, while a QDRO attorney has a narrow focus, specifically limited to helping clients divide retirement plan assets pursuant to a divorce or court-ordered support.
With a specific focus on the particular areas of law affecting QDROs, the QDRO attorney’s role is to implement divisions of retirement plan interests consistent with marital dissolution and related support orders.
A QDRO attorney creates QDROs for clients, acts as the pivotal point of contact between clients needing QDROs, their divorce lawyers, retirement plan administrators, and plan sponsors; and manages the QDRO process by consulting with family law attorneys, their clients, and independent actuaries on retirement asset division and associated documents, reviewing related documents, proposing and negotiating changes, and giving legal advice to clients and their attorneys concerning such documents.
Maybe, but it would not be in your best interest — for the same reason you would not want to do your own surgery — you are very likely to hurt yourself. Because of the legal and procedural complexity governing QDROs, it is never a good idea to try to handle QDRO issues without the involvement of an attorney who is familiar with the QDRO field of law. QDRO law is distinct from divorce and family law, and although some family law attorneys are skilled in both, many use a QDRO attorney’s services in order to free up time to devote to their clients’ other issues and to make sure the particulars are covered.
QDROs are complex legal documents. In Washington and in most other states, preparing complex legal documents is considered practicing law. Practicing law without being a licensed attorney is not allowed in this state, nor in most other states. In QDRO preparation by a non-lawyer, the potential for permanent harm to you, your ex, and to others is extremely likely. The cost of an attorney’s services to prepare a QDRO is minuscule compared to losing your retirement benefits because a non-lawyer botched your QDRO.
Sometimes, non-lawyers who have a financial background and a lot of experience with QDROs will work as consultants to family law attorneys. As long as they work under the supervision of an attorney licensed in the state having jurisdiction over the QDRO, those consultants may be acting within the scope of the law, but the supervising attorney is still ultimately responsible for your QDRO. This is why, when family law attorneys outsource QDRO work, they prefer to use other lawyers licensed in the same jurisdiction who are familiar with the state’s domestic relations law and principles of equity.
Under Washington law, limited license legal technicians (LLLTs) are not permitted to prepare QDROs for other people. Washington’s Limited Practice Regulation APR 28(B)(3)(c) specifically prohibits LLLTs from doing so: LLLTs
shall not advise or assist clients regarding retirement assets that require a supplemental order to divide and award, which includes division of all defined benefit plans and defined contribution plans. If you are offered QDRO preparation services by an LLLT in Washington state, you should refuse and report the incident to the Washington State Bar Association at (206) 727-8207.
Although they may get qualified faster, model QDROs offered by plan sponsors and plan administrators are almost always designed to benefit the plan sponsor or administrator, rather than to meet the requirements of the two (ex-)spouses who need the QDRO. Also, as model QDROs are not customized to any particular situation, they leave out important, situation-specific details that can make a huge difference to the spouses affected by them.
Either one; the first in line usually becomes the QDRO attorney’s client.
A client only. If the QDRO preparation is done during a divorce proceeding rather than after the fact, the QDRO attorney will likely collaborate with the client’s divorce attorney on the client’s behalf.
Both client and (ex)spouse jointly, or separately with a client’s spouse or ex-spouse on the same matter, because both of those situations present a conflict of interest.
Working with this firm
A prospective client (or their divorce attorney on their behalf) contacts this firm. If agreed, this firm signs a client representation agreement with the client and the client pays the QDRO preparation fee in advance. See the last item below in this section on making an appointment.
To avoid a conflict of interest, this firm cannot work directly with you or give you legal advice. We can answer general questions about the QDRO process, but if you have your own attorney, we cannot speak directly to you without your attorney’s documented permission. With our client’s prior written permission, we may be able to share some non-privileged QDRO-specific information with you depending upon the type of information sought.
Every QDRO involves quite a few steps. The QDRO attorney will:
- Consult with clients and their divorce lawyers.
- Establish contact with plan administrators and provide them with notice of pending QDROs and dissolution.
- Investigate the parties’ benefits, rights in, and features of retirement plans and related accounts.
- Review existing and draft dissolution orders for pertinent language on retirement interests divisions.
- Determine applicable legal requirements and specific plan rules for asset divisions.
- Establish QDRO design for division of retirement interests with client and the parties’ family law attorneys’ input, including arranging for any needed actuarial benefit valuation.
- Manage the QDRO preparation process by creating QDROs in accord with party agreements and dissolution orders, forwarding them to plan administrators for preliminary review, and negotiating any changes with plan administrators. For clients represented by divorce lawyers who cannot agree with each other, we may meet with the lawyers to help resolve QDRO-related issues, in which case additional hourly fees apply unless such issues can be resolved in a single conference call of fifteen minutes or less with the lawyers.
- Manage the QDRO communication process by delivering drafts to parties in interest for revision, comments, and signature (the spouses and their attorneys); respond to QDRO questions from clients, spouses, and their attorneys; deliver court-certified QDROs to plan administrators for final review and qualification; notify spouses and their attorneys when plan administrators accept QDROs as qualified.
- Acquire written determinations from plan administrators that proposed or submitted QDROs satisfy applicable plan and legal requirements and forward them to clients and their attorneys.
- Review plan administrators’ written determinations for consistency with QDROs’ terms.
With QDROs, we don’t spend much time in court. Most of this firm’s activity is focused on pre and post-court QDRO creation and follow-up, and communications with clients, their divorce lawyers, and with plan administrators, rather than in the courts. Generally, when a client is involved in a current divorce proceeding, we do not attend court hearings or arbitration, or file and retrieve QDROs with and from the courts, outside of an additional agreement and fee to account for that time.
For QDRO clients not involved in a current divorce proceeding, we file and retrieve QDROs with and from the courts by other methods not involving court appearances. We also limit appearances at hearings, in person or by telephone, providing that service by prior written agreement only and for an additional hourly fee to account for that time.
The client, or both the client and (ex)spouse, or either party’s divorce lawyer on behalf of their respective client — the fee source does not determine who the QDRO attorney’s client is. While this firm can accept fee payment from the client’s (ex)spouse, payment will not be sought from that non-client spouse even if the court ordered the non-client spouse to pay it: the client is the one ultimately responsible for paying the QDRO attorney’s fee.
Recognizing that everyone’s situation is unique, this law firm does not do ‘one-size-fits-all’ QDROs. This firm’s QDROs start at $450, and though we prepare most QDROs for a flat fee, that fee is estimated at the initial consultation and can vary per-QDRO, depending on the unique facts of and time required in each case.
Although IRA’s do not, by law, require a QDRO, many plan administrators have requirements for IRA division that are substantially similar to and nearly as complex as QDROs, so an IRA division may be a bit less expensive than a QDRO, but it might not be depending upon the facts and circumstances.
Initial consultations are not charged to clients up-front, that time is incorporated into the fee for a QDRO. If you decide not to work with us and decline a client representation agreement, you are not charged for the initial consultation.
To save a bit on fees, a client can assume responsibility for some tasks, like filing and retrieving QDROs with the courts and forwarding them to us, and filing QDRO(s) with a plan administrator. We’ll discount the fee charged for your QDRO a little if you want to take responsibility for a few tasks, which include:
- filing the prepared QDRO(s) in the court(s) having jurisdiction over the dissolution and/or over the QDRO(s),
- delivering clocked-in copies of filed QDROs to this firm,
- retrieving court-certified copies of QDROs (those signed by a judge) and delivering them to us, and
- serving court-certified QDRO(s) on plan administrator(s).
When QDROs are prepared during divorce proceedings, most clients expect their divorce attorney to do these things, or if after divorce, that the QDRO attorney do them, but clients can save a little money by doing these tasks themselves if they are willing to embrace the responsibility that goes with doing so. Make no mistake, these are time, detail, and procedure-sensitive responsibilities. Although we can provide detailed instructions, clients assuming responsibility for such tasks on their own must also assume responsibility for any mistakes they make by not following instructions.
If your QDRO requires an actuarial valuation, to control expense you might be tempted to use the cheapest actuary you can find, or even a newly-minted accountant. Things might turn out okay, but they might not. You would be better served by selecting an actuary from an array of actuaries who have the credentials, skills, and experience needed for the valuation of your retirement benefit for your QDRO, and then doing a cost comparison. An actuary’s fee for the valuation, like an attorney’s fee for designing and negotiating your QDRO, is very little in comparison to the magnitude of harm possible in lost value by proceeding without either’s help in arranging for your QDRO. See the actuarial valuation question above in the
General FAQs section.
No lawyer can make valid guarantees of success in any legal matter, and if they do, they offer an illusion for money: don’t buy it. Lawyers who make such guarantees have no respect for you. Even those having six degrees from Harvard and charging $900 per hour do not make the best lawyer that money can buy if the lawyer is a con artist. Be skeptical.
A decent lawyer will not only have reasonable credentials and adequate experience to help you, they will be respectable for their negotiating style as well as their skills and knowledge, and get the work done, on time. In addition, they will have personal integrity and will care about your legal issues. Above all, they will work in accord with the rules of legal ethics.
At minimum, what you can reasonably expect from any licensed attorney is that they will be competent in representing you, keep your confidences, return your calls, not steal your money, be your advocate, and make their best efforts on your behalf. It helps if they also have functional social skills and a sense of humor.
For more than 18 years, all our clients have decided we pass the above tests, plus some, and we have never had a complaint.
Marjorie Simmons, an attorney licensed for 18+ years, admitted to the bars of Washington state and South Carolina, and located in Skagit county Washington.
A simple email or telephone call can get things started, or use the contact form. Meeting in person is usually not necessary, but if needed, can by done by appointment.
If you would like to get in touch for a consultation, please fill out the free QDRO preparation questionnaire to help corral the facts prior to our initial consultation. That information is needed before a representation agreement is signed, as those facts are used in part to determine the QDRO fee — and you’ll want to have a fee estimate before signing an agreement with this firm or with any law firm.
The information release form, as well as other related documents, can all be routed to us once you have a representation agreement in place with this firm, through your current divorce attorney for convenience, if desired, or sent directly.
Privacy note: Documents containing sensitive or personal information, such as Social Security numbers, are never emailed by this law firm, nor should anyone send sensitive or personal information to this law firm by email. Clients desiring document sharing via secure cloud storage can be accommodated.
For attorneys and plan administrators
For counsel needing assistance in crafting a QDRO, we are happy to help negotiate a QDRO’s assignments and language, to discuss alternative structures, and to offer suggestions to help you help your client. If needed, we will also participate in conference calls, arbitration, and special sets. Colleagues hire us on an hourly fee basis, but in many cases it can be more cost-effective for attorneys (and their dissolution client) to outsource QDRO work to us.
Counsel making a referral are encouraged to do so at the outset of a separation or dissolution, well before the dissolution hearing. Although we can draft a QDRO post-decree as well, sooner is far better for the client. If a hearing on the QDRO is needed, the client will need representation for the hearing, and we will not be available for in-court representation, including special sets, unless the client opts in to and pays for that separate service to account for that time.
This firm values cordial working relationships with plan administrators, whether our client is your participant or the alternate payee. The firm strives to develop and maintain a good working knowledge of all plans affecting our clients, and appreciates the fact that one client’s situation cannot trump clear plan rules. When plan rules are ambiguous, as a client’s advocate we will of course argue in favor of our client’s interest, but pledge to do so always in a courteous and civil manner.
Plan administrators can refer a QDRO matter for Washington and South Carolina parties for dissolutions occurring in those states. Please direct the parties to this page for more information.
PO Box 688 Burlington WA 98233
(360) 299 1121