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Dividing retirement assets in divorce: looking at the requirements of QDROs, P.1

Previously, we began looking at the issue of Social Security retirement benefits and divorce. As we noted, it is important for divorcing couples to be aware of how the Social Security system works with dispensation of retirement benefits for divorced couples, as this could impact the timing of divorce and potentially property division negotiations.

Social Security retirement benefits are closely related to the issue of retirement assets. Taking stock of retirement assets in divorce is critical since, for many couples, retirement assets are among their most significant assets. Any discussion of division of retirement assets in divorce has to take into account the issue of domestic relations orders. A domestic relations order is a state court order which creates or recognizes the right of an alternate payee to receive part of the benefits payable to a participant under a retirement plan. 

A domestic relations order must certain requirements to be considered “qualified” under ERISA, the Employee Retirement Income Security Act. The following are the requirements for qualified domestic relations orders (QDROs) listed under ERISA:

  • The name and last known mailing address of the retirement plan participant and each alternate payee must be provided;
  • The name of each plan to which the order applies must be provided;
  • The dollar amount or percentage of the benefit to be paid to the alternate payee must be provided;
  • The number of payment or time period to which the order applies must be provided;

In addition to these positive requirements, there are also negative requirements for QDROs. Next time, we’ll continue looking at the topic of qualified domestic relations orders and how they can be used in the divorce process. 

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