Ways to Make Your Qualified Domestic Relations Order (QDRO) More Enforceable in NJ
Divorce Lawyers Advising You on the Important Aspects of Qualified Domestic Relations Orders (QDRO)
Equitable division of property is probably one of the most challenging aspects of the divorce process or civil union dissolution as it can determine your financial future and any obligations you may have regarding child support, alimony and spousal support, and what will happen with family-owned businesses, marital property, personal property protected during divorce, or any existing retirement funds or vested stock options.
Sadly, retirement plans can be forgotten during a divorce when a couple is too young for retirement. Without a designated court order or QDRO, a significant portion of marital assets may be overlooked, and one may find themselves and their dependent children at risk of economic insecurity or responsible for a huge tax bill.
At The Montanari Law Group, LLC., our mission is to anticipate and prepare for any and all challenges that may arise during your divorce to achieve the best possible outcome. This includes advising and assisting with the preparation and securing of a relevant Qualified Domestic Relations Order (QDRO) that may be necessary in your case to protect your interests. Our attorneys are always available to assist you with answering your unique questions and addressing your concerns regarding divorce and property division. We encourage you to contact our New Jersey offices at 973-233-4396 for a free consultation today.
What is a Qualified Domestic Relations Order (QDRO) in NJ?
When NJ couples divorce, the Department of Labor, defines a “qualified domestic relation order” (QDRO) as a: “domestic relations order that creates or recognizes the existence of an “alternate payee’s” right to receive” a portion or the entire participant spouse’s retirement account. Furthermore, an alternate payee cannot be anyone other than a spouse, former spouse, child, or another dependent of a participant.
After a QDRO is drafted by an experienced NJ equitable division attorney to include certain information and meets other certain requirements, it is signed off on by a judge.
What Typical Retirement Plans Can Be Divided with a QDRO?
QDROs can be used to divide defined benefit plans (or pensions like the Public Employees Retirement System (PERS), the State Teachers’ Retirement System (STRS), Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) and the Armed Forces Retirement System) and defined contribution plans. The latter tends to include employer-based pension plans often added as part of the compensation package, and which can be accessed upon retirement. They may include:
- 401(k), 403(b), and 457 plans
- profit-sharing plans
- employee stock ownership plans
- tax-sheltered annuities
- thrift plans, and
- money purchase plans.
Am I Entitled to My Former Spouse’s Retirement Plan Without a QDRO?
According to Federal law, a retirement benefit can be subject to division between former spouses solely in the presence of a QDRO.
A divorce decree alone may not be enough to ensure your entitlement to retirement benefits. Although in some cases a divorce decree alone can meet the requirements for it to be treated as a QDRO, more often than not, a retirement plan will require a completely separate document (i.e., QDRO) from the divorce decree for it to be considered enforceable.
Can a QDRO Cover More Than One Retirement Plan in Passaic, New Jersey?
Yes. A QDRO can assign retirement benefits rights under more than one retirement plan of the same or different employers as long as each plan and the assignment of benefit rights under each plan are clearly specified.
Do All QDROs Have to Have the Same Provisions?
No. The specific content can vary, but all QDRO’s must include the:
- names and addresses of the participant and alternate payee(s)
- name of the plan(s) on the type of retirement plan
- nature of the participant’s retirement benefits,
- purposes behind issuing the order, and the intent of the drafting parties.
Challenges of Dividing Retirement Plans
A QDRO is used in certain retirement plans, while others can simply be divided through a conventional order. As we discussed in previous articles on splitting your 401k in divorce, any money put into a 401k account from the beginning of the marriage up until the date divorce is filed, is subject to equitable distribution. When NJ couples divorce, if the nonparticipant spouse is expected to receive a portion of the entire participant spouse’s retirement account, a QDRO will be drafted by the attorneys to be signed off on by judge.
As part of a QDRO, the judge in the divorce proceedings will sign an order that tells the retirement plan to provide the distribution of the retirement account to the nonparticipant spouse. A QDRO is used in certain retirement plans, while others can simply be divided through a conventional order.
How Long Does it Take to Obtain a QDRO in NJ?
Numerous factors play a role in the amount of time it takes to obtain a QDRO and ultimately receives benefits. An experienced family law attorney generally drafts the most necessary steps to obtain a QDRO during the divorce process.
Because the New Jersey Family Part Case Information Statement (CIS) financial disclosure document forms the backbone for asset division required by divorce courts, it provides the framework for each party to secure their fair share in the marital settlement or divorce decree.
A detailed and well-crafted draft with all the pertinent financial documentation from the CIS at hand means that it could take a minimum of two to three months from start to finish to obtain a QDRO. Unfortunately, some attorneys fail to collect the appropriate information or incorrectly understand the retirement benefits in question during the divorce process. Thus, they often wrongly believe that you need a final judgment of divorce to obtain a QDRO, but that is not the case. Because of this reality, it can take up to two years for a divorcing couple to obtain a QDRO and get answers to certain legal questions associated with it.
Furthermore, if a divorce attorney uses broad or general language in their agreements related to the division of retirement plans, does not specify which plans to divide, or even divides non-divisible retirement plans, you may find yourself in the problematic position of needing to seek a post-divorce modification.
If you have concerns about how soon you or your ex-spouse can obtain a QDRO or receive benefits under a QDRO, consult a seasoned Passaic County, NJ equitable distribution attorney who will be happy to review your circumstances and answer any questions you may have.
Typical Non-divisible Retirement Plans You Don’t Need a QDRO for
- government or military pension
- individual retirement accounts (IRAs) – court-ordered needed
- deferred annuities plans – court-ordered needed
- deferred contribution plans, and
- any other type of plan that is not “qualified.”
Do I Need an Attorney for a QDRO in Ringwood, NJ?
The financial aspects of a divorce can be frustratingly complicated and frequently require a knowledgable family law attorney and/or experienced tax consultant to help determine how to divide retirement accounts equitably and how to answer:
- What is the value of the retirement plan now?
- Will the plan appreciate in value?
- Can the plan be divided now or must it wait till the participant spouse retires?
- How much of the plan should the non-participant spouse receive?
- What tax implications are there, if any, for dividing the plan?
- If the participant spouse dies before retirement, are there survivorship benefits?
Contact a Little Falls, NJ Divorce Attorney to Obtain an Equitable & Enforceable QDRO
If you have questions about whether you are entitled to your spouse’s pension or retirement plans, or have questions about how to obtain a QDRO (Qualified Domestic Relations Order) contact a NJ divorce attorney who can protect your rights and help you secure your financial future.
At The Montanari Law Group, LLC our New Jersey family lawyers are trained to navigate the intricacies of a couple’s wealth and holdings, and accurately evaluate who is entitled to how much of any given asset. By assisting clients in Passaic County, Essex County, and Hudson County, including towns like Woodland Park, Wayne, Little Falls, Montclair, South Orange, Jersey City, Hoboken, and surrounding communities, our team of bright legal minds deploys all of their knowledge and resources to achieve the best possible outcome in your case.