We at MooneyQdro PLC, intend this site to assist Divorce lawyers and clients through the maze of dividing retirement assets upon divorce. We are ready and willing to consult with attorneys at no cost on the significant issues which face the practitioner in this complex area. We are happy to consult in person or by phone. Our charges for drafting the specific order applicable to each case is a reasonable flat fee.
The following are the six areas of critical consideration even the most experienced Divorce lawyer should entertain regarding retirement benefits when fashioning a settlement for the client:
- What kind of Plan is being divided? Private for profit employers even now offer Defined Benefit Plans (traditional pensions) or a Defined Contribution Plan (401k or 457 plans). Typically these are divided by a Qualified Domestic Relations Order (QDRO). State and municipal governmental employees also may have DB and DC Plans which may require both an Eligible Domestic Relations Order (for the pension) and a QDRO (for the Defined Contribution Plan) Federal governmental employees require a different set of orders COAP and /or RBO to divide the retirement benefits. Non-profits also provide benefits both pensions and DC Plans such as 401a and 403b Plans.
- What issues should be considered when drafting a settlement agreement involving retirement assets? A short but not all inclusive list is as follows:
- Is the entire asset marital (earned during the marriage)? If so it’s a 50-50 split.
- Is some of the asset accumulated prior to the marriage? If so how is that taken into consideration?
- Statements will be needed, from date of marriage
- Remember that the pre-marital value will be awarded to the Participant without gains and losses.
- In a pension situation should the “prospective coveture” or the “accrued coveture” approach be used/
- In a 401k or similar DC Plan are loans included or excluded in the division. (This is a very tricky decision)
- What should be the date of division? This is a matter of negotiation and each case is different and can have a significant impact on both Participant and Alternate Payee
- Should the amount awarded be subject to gains and losses? Of course this is a question of “whose ox is being gored” but it is also a question of how the impact of the general economy is being shared.
- What about Death? Most Defined Contribution Plans (401K and the like) will allow the Alternate Payee to name a beneficiary of the award prior to full distribution. In most cases if a beneficiary is not named the Plan pays the award to the Alternate Payee’s estate. In the case of a Defined Benefit Plan (traditional pension) it is important to name the Alternate Payee as the Pre-retirement and Post-retirement surviving spouse at least to the extent of the proportion of the pension awarded. Attorneys should be aware that a DB Plan “in pay status” poses problems regarding the option re “single life” or “joint and survivor” benefit. In some Plans the surviving spouse benefit itself can be revoked by use of a QDRO. Surviving spouse benefits should be secured in QDRO or other orders affecting Defined Benefit Plans as well as post-retirement increases. The Participant’s death will normally have no impact on the Alternate payee in both DC and DB plans if the QDRO is correctly drafted
- Should MooneyQdro PLC draft the Order in your case? Absolutely for the following reasons:
- We have prepared thousands of such orders
- Our work is based on a reasonable flat fee
- We will amend the order, if needed, until it is accepted by the Plan at no further charge.
- We are not interested in interfering with your relationship with your client.
- We are completely neutral and deem our duty as following the Judgment to the letter.
- Our involvement allow you to distance yourself from the arduous process of approval of the order
- We will take on both parties as a neutral if counsel of record wishes to be released from the case before the DRO is approved.
- We can save your client hundreds if not thousands of dollars because of our familiarity with most Plans
- We are happy to work with Counsel who wish to stay involved in the DRO process
- Unlike some QDRO firms we will calculate an “equalization” of accounts if each party has a DC plan which is marital