Attorneys and their clients must be careful when dividing pensions and retirement accounts in a divorce. Hoffman Divorce Strategies assists attorneys and their clients with the complex questions that need to be answered to make sure that the property partition filed with the Court contains enough information to divide the pension and retirement accounts, and that the clients understand what is being transferred. Hoffman Divorce Strategies is also available to assist with the preparation of the Qualified Domestic Relations Order (QDRO) or Pension Division Order (PDO) needed in addition to a property partition to complete the pension and retirement account division.
When to File the QDRO or PDO
Same day filing as Property Partition. The best practice, whenever possible, is to complete the QDRO or PDO at the same time as the Property Partition. The property partition can then refer to the QDRO as an Exhibit. Not only does this simplify the process but your clients are much happier than those that find out another court order needs to be prepared after they thought that their Property had been divided.
Filing After the Property Partition. If the QDRO or PDO will be filed at a later date, it is suggested that the following language should be included in the property partition after being confirmed with each Plan or Retirement Account Custodian:
Defined Contribution Plans. Examples are 401 (k), 403 (b), Thrift Savings Plans and IRA accounts. These plans have statements for individual employees showing the current value of the account. Make sure that the property partition identifies each plan and states:
- How much and at what date, in dollars or as a percentage of the Vested Account Balance, each party will receive from the plan. A statement that each spouse will receive “one half of the community property value of an account” is not a clear instruction if a QDRO or PDO is to be prepared later.
- If the award is a percentage of the vested account balance of a qualified plan that allows loans to employees, the property partition should state if the percentage award should be calculated including or excluding loans to the employee.
- Whether the award is subject to gains and losses until the date the funds are segregated into an account for the benefit of the non-employee spouse.
Defined Benefit Plans. Examples are federal and state civil service, military and plans administered under the Employee Retirement Income Security Act. A defined benefit plan does not have an account for each employee, is not usually awarded in a lump sum, but is a promise to pay a certain amount each month to an employee or his or her survivor(s) during their lifetimes. Make sure that the property partition identifies each plan and states:
- How much as a dollar, percentage or formula, of the community portion of the living benefit, each party will receive from the plan. In Louisiana this usually follows the SIMS formula, although property partitions dividing military pension plans cannot follow SIMS when dividing an unretired military member’s benefit.
- The survivor benefit awarded to the spouse who is not a participant in the plan, and how the costs of this survivor benefit will be paid.
At Hoffman Divorce Strategies we work with attorneys and their clients to negotiate and divide their Pension and Retirement Accounts. Our expertise makes the process easier for attorneys and their clients who may be struggling to understand different types of plans and the rules governing the division of those plans.
For more information and to discover how we can help, contact us to arrange for a consultation.