Westchester Divorce Attorney for Retirement Account and Pension Plan Division
There are typically many financial aspects to a New York divorce, and they follow the principle of equitable distribution, which is aimed at dividing financial assets fairly, yet not necessarily equally, between the divorcing spouses.
QDRO stands for Qualified Domestic Relations Order, which is a court-ordered directive aimed at fairly evaluating, dividing, and distributing various types of retirement account and pension plan assets in the event of divorce.
Among the important Purposes and Benefits of QDROs in a New York divorce:
- To legally provide an ex-spouse with a portion of the account owner’s retirement funds, while shielding the ex-spouse from negative tax consequences.
- The QDRO can protect the ex-spouse from ending up with little to no retirement funds in the event of divorce. This can be particularly crucial in situations where the ex-spouse may have sacrificed a paying career in outside employment, in order to maintain the home and/or raise the couple’s children.
- The QDRO can address and include survivorship rights benefits, pre-retirement and post-retirement death benefits and disability pension benefits, in addition to the division and distribution of the retirement funds themselves.
The plans in question must governed by the Employee Retirement Income Security Act of 1974 (ERISA) and include “defined contribution plan” vehicles such as 401(k) and 403(b), and “defined benefit plans”, commonly known as pensions. IRA and Roth IRA accounts, while divisible as marital property in divorce, do not require a QDRO if they are not held through an employer plan.
While most private employers have moved to defined contribution plan systems over the years, pension plans are still very common among union and government employers. Pension plans governed by the New York State and Local Retirement System (NYSLRS) include the NYPD and FDNY Pension Plans, among many others.
As background, the New York State Court of Appeals determined that these pension plans are marital property and thus subject to the principle of equitable distribution in divorce, under what is referred to as the Majauskas Formula.
This ruling has created the legal basis to allow a New York court to decide that a member’s retirement benefits earned during the marriage are to be divided with and distributed to the member’s ex-spouse in a divorce, and the court can issue a QDRO accordingly as part of the final divorce decree or sometime thereafter.
What Steps are Involved in the QDRO Process in a New York Divorce?
There are generally a number of steps in the QDRO process, which can vary depending upon individual situational factors:
- Information gathering of all relevant financial documents and information, and drafting both the divorce settlement agreement and subsequent QDRO accordingly, to accurately reflect mutually-agreed terms.
- Approval of the draft QDRO by the retirement or pension plan administrator, making sure it satisfies regulatory requirements and helping avoid challenges in the future.
- Signature of the QDRO by both spouses and then signature of the final QDRO by the divorce court judge
- Final QDRO approval by the retirement plan or pension plan administrator. Once approved, the retirement benefits will be disbursed to the receiving ex-spouse.
The equitable division of the various assets in divorce can be complicated, lengthy and highly contentious. The division of retirement or pension plan assets and the creation of QDROs perhaps even more so, as they require a great deal of interaction with parties and regulations outside the divorce process itself, such as plan administrators and the rules and legal statutes governing each individual retirement plan.
It is in your best interests to work with an attorney with a deep understanding and depth of experience and skill in negotiating, mediating and litigating all aspects and types of asset division and distribution in divorce, including QDROs and retirement plan division.
I offer 24 years of divorce attorney experience in New York Divorce and Family Law, including effectively and efficiently handling Divorce for Government and Unionized Employees, High Net Worth Divorce, Divorce for Those Over Fifty and all matters surrounding equitable asset division and distribution in divorce.
I offer a free initial 15-minute phone or video consultation and my office is conveniently located in downtown White Plains, NY
I can be reached by calling 914 821 5200 or by submitting my online Contact Form
