QDRO FAQS
FAQs General
1. What is a Qualified Domestic Relations Order (QDRO)?
2. What is a Domestic Relations Order (DRO)?
3. Can I write my own QDRO or DRO?
4. Who is the "Participant" under a QDRO or DRO?
5. Who is the "Alternate Payee" under a QDRO or DRO?
6. Is a QDRO or DRO always an impartial document?
7. Is it appropriate to use a "Model" QDRO provided by a plan administrator?
8. Why is the division of pensions such a complicated matter?
9. When should a QDRO be drafted?
10. Is it possible for an Alternate Payee to lose his/her rights to the pension?
11. Is it better to draft a QDRO or to take another asset as a trade?

FAQs for Defined Benefit Plans (Qualified Domestic Relations Order)
12. What is a Defined Benefit Plan?
13. Is it possible to receive a lump sum cash payment when drafting a QDRO against a defined benefit plan?
14. Can I get my benefits from a defined benefit plan right away?
15. Is it always necessary to elect post-retirement survivor benefits for an Alternate Payee?
16. If I am the participant and I remarry, how will the QDRO affect my new spouse?
17. What is a Qualified Preretirement Survivor Annuity (QPSA)?
18. Can an ex-spouse receive all or a portion of a Qualified Pre-retirement Survivor Annuity if the participant dies before retirement?
19. Can an ex-spouse receive both a part of the pension and a Qualified Preretirement Survivor Annuity?
20. If an Alternate Payee is awarded part of the pension, but not the Qualified Preretirement Survivor Annuity, what happens if the Participant dies prior to retirement?
21. What are post retirement cost-of-living increases (COLAs)?
22. What is an early retirement subsidy?

FAQs for Defined Contribution Plans (Qualified Domestic Relations Order)
23. What is a Defined Contribution Plan?
24. Can I have the plan write a check directly to me for the amount that I have been awarded from my spouse’s defined contribution plan?
25. What are the tax implications of taking an immediate cash distribution from a defined contribution account?
26. What about the interest and/or investment gains and losses that may happen from the time it is agreed that the account is to be divided until the Alternate Payee receives a distribution?

FAQs for the Military Retirement System (Retired Pay Court Order)
27. Is it possible to write a QDRO against the Military Retirement System?
28. Is it true that the Member and Former Spouse must have been married for 10 years during which the Member was earning points towards retirement in order for the Former Spouse to receive court ordered benefits directly from the Military Retirement System?
29. Is it possible to use the number of points earned by the Member during the marriage to determine the portion of the military benefits earned during the marriage?
30. When can a former spouse receive benefits under the Military Retirement System?
31. Can the former spouse receive a lump sum payment from the Military?
32. How long will payments be made to the former spouse from the Military Retirement System?
33. Can a member have more than one person listed as the beneficiary for the survivor benefit plan annuity (SBP)?
34. Are there any forms which must be completed and sent to the DFAS with the Court Order?
35. Are there any time restrictions relative to awarding benefits to a former spouse under the Military Retirement System?

FAQs for the Civil Service Retirement System (CSRS) and Federal Employees Retirement System (CSRS) (Court Order Acceptable for Processing)
36. Is it possible to write a QDRO against the CSRS or FERS?
37. When can a former spouse receive benefits under the CSRS or FERS?
38. Can the former spouse receive a lump sum payment from the CSRS or FERS?
39. How long will payments be made to the former spouse from the OPM?
40. Can an employee have more than one person listed as the beneficiary for survivor annuities?

FAQs for State and Local Government (Domestic Relations Order)
41. When can the Alternate Payee receive benefits from the Plan?
42. How long will the Alternate Payee be entitled to receive benefits from the Plan?
43. Do all state and local government pension plans accept court orders awarding benefits to an Alternate Payee?
44. Does an Alternate Payee have the same options under a pension plan administered by a state or local government as are available under a private company or union?
45. Can benefits be paid in the form of a lump sum benefit?

1. What is a Qualified Domestic Relations Order (QDRO)?

In basic terms, a QDRO is a written set of instructions that explains to a plan administrator that two parties are dividing pension benefits due to equitable distribution. The instructions set forth a method for the plan administrator to determine how much of the benefits are to be paid to each party, when such benefits can be paid, how such benefits should be paid, etc.

2. What is a Domestic Relations Order (DRO)?

A DRO is the same set of instructions as a QDRO except it is written against a plan that is not qualified under certain federal statutes. DROs are typically written against governmental plans.

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3. Can I write my own QDRO or DRO?

We do not recommend it. The true definition of these two documents is a lot more complicated than the definitions recited above. A QDRO must contain certain information which is outlined in the Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Internal Revenue Code (IRC). Plans which require DROs do not fall under the rules a regulations of ERISA, and therefore, must follow a different set of standards.

4. Who is the "Participant" under a QDRO or DRO?

The Participant is the person who has earned the pension.

5. Who is the "Alternate Payee" under a QDRO or DRO?

The Alternate Payee is the person that is being awarded a part of the pension. An Alternate Payee can be a spouse, former spouse, child or other dependent of the Participant.

6. Is a QDRO or DRO always an impartial document?

No. Depending upon who writes the order, certain provisions can be more beneficial to one party rather than the other. Therefore, it is important to address the important issues inherent in QDROs when negotiating property division. By knowing and agreeing on how certain issues will be addressed, the ability of the person drafting the order to make choices that benefit one party over the other is removed. The end product is a QDRO that does not contain any surprises.

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7. Is it appropriate to use a "Model" QDRO provided by a plan administrator?

It depends. "Model" QDROs are often drafted to best benefit the employee. Therefore, caution should be exercised when using a model.

8. Why is the division of pensions such a complicated matter?

When dividing a pension using a QDRO, it is necessary to incorporate the applicable provisions of both state and federal laws which pertain to equitable distribution of pensions. Therefore, a comprehensive knowledge of both state and federal laws as they pertain to equitable distribution of retirement benefits is essential.

9. When should a QDRO be drafted?

Immediately. The process of obtaining the appropriate information and drafting of the QDRO should take place early in the divorce process, and occur at the same time the parties negotiate the other terms of their settlement. Since it sometimes takes several weeks to obtain the necessary information, it is important to begin this process early so that the provisions regarding the retirement benefits can be included in the agreement of the parties. The ideal situation would be to have the court certify the QDRO at the same time the decree of divorce is entered. If the divorce has already occurred, it is important to begin and complete this process as soon as possible.

10. Is it possible for an Alternate Payee to lose his/her rights to the pension?

Yes. If the participant dies before the QDRO is finished and approved by the Plan, the alternate payee runs a substantial risk of losing his/her interest in the pension.

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11. Is it better to draft a QDRO or to take another asset as a trade?

This depends on the needs of the parties. What is important to one person is not always important to another. Before making this decision, the parties should consult with a financial expert.

FAQs for Defined Benefit Plans (Qualified Domestic Relations Order)

12. What is a Defined Benefit Plan?

A defined benefit plan is a pension plan which a pays a monthly benefit to the employee after retirement. The benefit is usually calculated using a formula which often employs his/her years of credited service and final average salary. This benefit is typically paid when the employee reaches his/her normal retirement age for the remainder of his/her lifetime.

13. Is it possible to receive a lump sum cash payment when drafting a QDRO against a defined benefit plan?

Typically, no. Most defined benefit plans will only pay both participants and alternate payees benefits on a monthly basis. However, the provisions of the plan itself should be examined before ruling out this possibility.

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14. Can I get my benefits from a defined benefit plan right away?

Under a defined benefit plan, the benefit awarded to the alternate payee may begin, at his/her election, when the participant reaches his/her "earliest retirement age" under the Plan. This is the earliest point in time benefits may begin being paid to the alternate payee. In some cases, the QDRO could be drafted to only allow commencement of benefits to the alternate payee to begin when the participant actually retires.

15. Is it always necessary to elect post-retirement survivor benefits for an Alternate Payee?

No. Most plans will allow the use of a separate interest approach to dividing the benefits. Using this type of QDRO, the Alternate Payee’s share of the benefits are actuarially adjusted and therefore, payable for the lifetime of the Alternate Payee. In such a case, the death of the Participant after benefits have commenced will not affect payment to the Alternate Payee.

16. If I am the participant and I remarry, how will the QDRO affect my new spouse?

If a separate interest approach is used in drafting your QDRO, you will be able to provide survivor benefits to your new spouse based upon the portion of the benefits that remained your property. Therefore, after your death, your spouse will still be able to receive a survivor benefit relative to the portion of your pension which was not awarded to your ex-spouse. If a shared interest approach is used to draft your QDRO, it is possible to jeopardize your new spouse’s survivor benefits. Therefore, by using the shared approach, you new spouse could receive nothing and your ex-spouse could receive everything after your death.

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17. What is a Qualified Preretirement Survivor Annuity (QPSA)?

The Qualified Pre-retirement Survivor Annuity is a benefit that is paid to an employee’s surviving spouse in the event of the employee’s death prior to retirement.

18. Can an ex-spouse receive all or a portion of a Qualified Pre-retirement Survivor Annuity if the participant dies before retirement?

Yes. It is possible to include a provision in a QDRO that states that the ex-spouse is to be considered the "surviving spouse" for purposes of all or a portion of the Qualified Preretirement Survivor Annuity payable on behalf of the Participant in the event he/she should die prior to commencement of benefits. The ex-spouse can be the surviving spouse for all of this death benefit or for just the portion of the death benefit attributable to the portion of the pension awarded in the QDRO.

19. Can an ex-spouse receive both a part of the pension and a Qualified Preretirement Survivor Annuity?

Typically, no. Under most plans, the death of the employee before commencement of benefits would cause the pension to be forfeited, and the only benefit payable would be a qualified preretirement survivor annuity.

20. If an Alternate Payee is awarded part of the pension, but not the Qualified Preretirement Survivor Annuity, what happens if the Participant dies prior to retirement?

The Alternate Payee will probably get nothing from the Plan.

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21. What are post retirement cost-of-living increases (COLAs)?

These are small incremental increases that keep retirees’ benefits in line with inflation. A COLA is usually based upon the increase in the Consumer Price Index. Not all plans offer COLAs.

22. What is an early retirement subsidy?

Early retirement subsidies can come in a variety of different forms and are sometimes offered for different reasons. An early retirement subsidy can be a package deal to encourage early retirement in an effort by the company or union to downsize their workforce or can be a bonus for completion of a certain amount of years of service. Not all plans offer early retirement subsidies.

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FAQs for Defined Contribution Plans (Qualified Domestic Relations Order)

23. What is a Defined Contribution Plan?

A defined contribution plan is a pension plan which has an account specified for the individual employee. A defined amount is contributed to the plan by the individual, the employer or both. These plans are usually called 401(k) Plan, Savings Plan, Thrift Plan, etc. Funds can usually be transferred or withdrawn from the plan in a lump sum

24. Can I have the plan write a check directly to me for the amount that I have been awarded from my spouse’s defined contribution plan?

Usually, not immediately. There are three options available when drafting a QDRO against a defined contribution plan. One option is to have the Plan Administrator establish a separate account within the Plan in the name of the Alternate Payee. The amounts awarded are deposited into this account and the Alternate Payee is given the same options as the participant has as a member of the plan with regard to investment choices, designation of beneficiary(ies), etc.

A second option is to provide, within the body of the QDRO, the name and other pertinent information relative to a tax qualified account (i.e. IRA, 401(k)) which is eligible to house the funds by way of a direct rollover. The plan will then transfer the money directly to this account.

The third option is to have the Plan issue a check (CASH) directly to the Alternate Payee for the sum awarded in the QDRO. This check will be issued after any mandatory waiting period required by the Plan and after the appropriate tax and distribution forms have been completed by the Alternate Payee and returned to the Plan Administrator.

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25. What are the tax implications of taking an immediate cash distribution from a defined contribution account?

Usually, the Plan will withhold 20% of the amount requested for distribution for Federal income tax purposes. This is a withholding and should not be considered actual tax paid. At the end of the year, the Alternate Payee may receive a refund of part of this withholding or may be required to pay an additional sum depending upon the annual tax obligation of the Alternate Payee.

26. What about the interest and/or investment gains and losses that may happen from the time it is agreed that the account is to be divided until the Alternate Payee receives a distribution?

The QDRO can provide that the portion of the account awarded to the Alternate Payee be credited with any interest and/or investment gains (or losses) attributable thereon from the date the account is divided until the date the Alternate Payee receives a distribution.

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FAQs for the Military Retirement System (Retired Pay Court Order)

27. Is it possible to write a QDRO against the Military Retirement System?

In general terms, yes, except it is not called a QDRO.

28. Is it true that the Member and Former Spouse must have been married for 10 years during which the Member was earning points towards retirement in order for the Former Spouse to receive court ordered benefits directly from the Military Retirement System?

Yes. In order for a former spouse to receive payments directly from the Defense Finance and Accounting Service (DFAS), the member and former spouse must have been married for 10 years during which the member was performing military service creditable towards his/her retirement. In other words, if the marriage did not last for 10 years which coincide with 10 years of military service on the part of the member, DFAS will not honor an order awarding benefits to the former spouse.

However, just because the 10 Year Rule is not met does not mean that a former spouse does not have a claim against retired pay. According to the laws of most states, retirement benefits accumulated during the period of marriage are deemed marital or community property. Therefore, it is possible for a former spouse to be awarded a portion of the member’s retirement. However, the former spouse would have to receive his/her interest in the retirement benefits elsewhere (i.e. equity in the home, cash, payment made directly from the member, etc.).

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29. Is it possible to use the number of points earned by the Member during the marriage to determine the portion of the military benefits earned during the marriage?

Yes. It is common for members of the reserves to use points rather than time to determine the amount of his/her benefits which accumulated during the period of marriage. Since reservists earn a point for each day served, it is possible for someone to serve more days in one year than they do in another year. Since the number of points earned dictates the amount of the retirement benefit payable, it is not entirely accurate to assume that the same amount was earned towards retirement each year. Therefore, it is possible to write an Order which determines the marital portion by comparing the number of points earned during the marriage to the total number of points earned at retirement.

30. When can a former spouse receive benefits under the Military Retirement System?

The Military Retirement System will begin distributing benefits to the Former Spouse when the Member retires and begins receiving benefits.

31. Can the former spouse receive a lump sum payment from the Military?

No. Benefits are only paid on a monthly basis.

32. How long will payments be made to the former spouse from the Military Retirement System?

Benefits will paid by the Military to a former spouse for the lifetime of the member. Therefore, upon the member’s death, all payments to the former spouse will stop. However, if the former spouse was awarded a survivor benefit plan annuity (SBP), then upon the death of the member, the survivor annuity will become payable to the former spouse.

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33. Can a member have more than one person listed as the beneficiary for the survivor benefit plan annuity (SBP)?

No. Only one person can be designated as the beneficiary for the survivor benefit plan annuity. Therefore, only one person can receive the entire survivor benefit plan. It is not possible to designate a former spouse as beneficiary for part of the survivor annuity and a new spouse as beneficiary for the remainder of the survivor annuity.

34. Are there any forms which must be completed and sent to the DFAS with the Court Order?

Yes. Accompanying the Order should be a completed application form entitled "Request for Former Spouse Payments from Retired Pay" (DFAS Form 2293).

35. Are there any time restrictions relative to awarding benefits to a former spouse under the Military Retirement System?

There are no restrictions relative to the retirement benefit. However, there is a time restriction with respect to the survivor benefit plan annuity (SBP).

In order for the former spouse to remain eligible for survivor benefit plan coverage, the member must make an affirmative election for such coverage within 1 year of the date of the decree of divorce, dissolution or annulment. If the member neglects or refuses to make such affirmative election it is possible to protect the former spouse entitlement to the SBP coverage by having the former spouse make a "deemed election" for such coverage within the one year time limit. Accordingly, the member shall be deemed to have made the necessary elections thereby preserving the former spouse entitlement to the SBP coverage.

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FAQs for the Civil Service Retirement System (CSRS) and Federal Employees Retirement System (CSRS) (Court Order Acceptable for Processing)

36. Is it possible to write a QDRO against the CSRS or FERS?

In general terms, yes, except it is not called a QDRO. The Office of Personnel Management uses the title "Court Order Acceptable for Processing" (COAP).

37. When can a former spouse receive benefits under the CSRS or FERS?

The CSRS and FERS will begin distributing benefits to the Former Spouse when the Employee retires and begins receiving benefits.

38. Can the former spouse receive a lump sum payment from the CSRS or FERS?

A Former Spouse may not receive a lump sum distribution of retirement benefits, but may receive a lump sum payment of any withdrawal of contributions elected by the Employee. The COAP has to clearly illustrate the payment of benefits when a withdrawal of contributions is requested by the Employee.

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39. How long will payments be made to the former spouse from the OPM?

Benefits will paid by the OPM to a former spouse for the lifetime of the employee. Therefore, upon the employee’s death, all payments to the former spouse will stop. However, if the former spouse was awarded a former spouse survivor annuity, then upon the death of the employee, the survivor annuity will become payable to the former spouse.

40. Can an employee have more than one person listed as the beneficiary for survivor annuities?

Yes. The employee may have a former spouse survivor annuity established for a former spouse and a survivor annuity in place for a current spouse. Under the CSRS the total of these survivor annuities cannot exceed 55% of the Employee’s gross monthly retirement benefit, and under FERS cannot exceed 50% of the Employee’s gross monthly retirement benefit.

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FAQs for State and Local Government (Domestic Relations Order)

41. When can the Alternate Payee receive benefits from the Plan?

When the Participant actually retires and begins receiving benefits.

42. How long will the Alternate Payee be entitled to receive benefits from the Plan?

The Alternate Payee will receive benefits from the Plan for the lifetime of the Participant. In most circumstances, benefit payments will stop upon the death of the Participant.

43. Do all state and local government pension plans accept court orders awarding benefits to an Alternate Payee?

No. Before distribution of benefits using a court order is negotiated, it is important to determine that such method of distribution is permitted under the terms of the Plan.

44. Does an Alternate Payee have the same options under a pension plan administered by a state or local government as are available under a private company or union?

No. State and Local governmental pension plans do not fall under the guidelines of ERISA. Therefore, many of the options available to Alternate Payees under a company or union plan are not available under the government plan.

45. Can benefits be paid in the form of a lump sum benefit?

No, but with one exception. The portion of the Participant’s monthly retirement allowance awarded to the Alternate Payee may not be paid in the form of a lump sum payment. However, if for some reason, the Participant makes a withdrawal of contributions and interest to the Plan, in some cases, the Alternate Payee may receive a portion of those contributions and interest in the Plan paid in the form of a lump sum.

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