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How are retirement benefits divided in a divorce?

At some point after your New York divorce is finalized, the property settlement will be hammered out either between the parties and their attorneys or by the judge in a courtroom. One part of your settlement may be one or both parties' retirement benefits, which can be divided under the terms of a Qualified Domestic Relations Order.

What is a QDRO?

Known as a QDRO (kwa-dro), this order recognizes or creates the rights of an alternate payee (the ex-spouse) to receive all or some of the retirement benefits payable under a qualified employee's retirement plan.

What is a domestic relations order?

This comes in the form of an order, decree or judicial judgment, including approval of a property settlement, that is in accordance with state laws governing domestic relations. These include community property laws that relate to alimony, child support or marital property rights that benefit a spouse or former spouse, children or other dependents..

Because a signed property agreement between the parties does not constitute a QDRO, a state court or other authority must issue the QDRO for it to be recognized under the Employee Retirement Income Security Act of 1974. Most importantly, retirement plans will not assign retirement benefits unless they are part of a QDRO.

Does a state court have to issue the QDRO?

No, it doesn't. It may be issued by state agencies with the authority to do so.

Who may be the "alternate payee?"

No one other than a child, dependent, spouse or former spouse may be an alternate payee.

What information must be contained in a domestic relations order to qualify as a QDRO?

QDROs must have the following information:

-- Participant's and alternate payee's name and mailing address

-- Name of the plan to which the order applies

-- The amount or percentage or method of determining either the amount or percentage of the benefits to be paid out to the alternate payee

-- Number of payments or time period for which the order applies

Because of the complexities of QDROs, it is strongly advisable to obtain the services of a legal professional when preparing one.

Source: Department of Labor, "Qualified Domestic Relations Orders" Aug. 30, 2014

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