The Basics about a Qualified Domestic Relations Order

Often when a couple divorces, one of the most important assets that a court will divide is a retirement plan. For the spouse whose plan it is (the “participant spouse”), he or she may need to rely on that income for years to come. If the other spouse receives a significant portion of the retirement plan, that may compromise the participant spouse’s retirement. It can be particularly troublesome if the participant spouse re-marries or has children in the future.

In order to ensure that a Texas family law court divides a participant spouse’s retirement plan in the best manner, it is always best to consult with an experienced family law attorney. Too often, attorneys deal with retirement plans in a divorce with standard forms, resulting in ill-fitting solutions that fail to take into account the needs of their clients. If you are involved in a divorce and expect your retirement benefits to be a topic of debate, a Houston property division attorney can help you obtain the best outcome for your situation.

Retirement Plans and Qualified Domestic Relations Orders

A qualified domestic relations order, or QDRO, governs how a Texas family law court divides retirement plan benefits. A QDRO is a court order that dictates how a retirement plan’s benefits will flow to the parties in a divorce. A QDRO does not cover all retirement plans, as it does not govern government and military ones.

Normally, the only person entitled to receive the retirement benefits is the participant spouse. The law prohibits anyone else from receiving the benefits unless there is a QDRO in place, designating an “alternate payee”. In the case of a divorce, the QDRO would designate the non-participant spouse as the alternate payee. Alternate payees can only be spouses, former spouses, children, or dependants of the participant spouse.

Once a proper QDRO is in place, the administrator of the retirement plan will then pay out retirement benefits as the QDRO specifies. There are two ways to determine how much the non-participant spouse will receive under a QDRO:

  • If the divorce judgment specifies how much the non-participant spouse is supposed to receive, the QDRO will reflect the court’s order.
  • If the judgment is silent as to what benefits the non-participant spouse will receive, the party that prepares the QDRO will use a formula to determine the amount. Usually a formula is preferable to a set dollar amount, as the formula can take into account variations over time.

An important factor in determining how a QDRO splits retirement benefits is when participation in the plan began. If participation began after marriage, the QDRO is more likely to split benefits 50/50, whereas, if participation began before marriage, the participant spouse is likely to receive most of the plan’s benefits.

Crafting an appropriate and binding qualified domestic relations order requires the assistance of an experienced family law attorney. Contact a Houston community property lawyer at John K. Grubb & Associates, PC to learn more about what role a QDRO might play in your divorce.

Comments are closed.