There is a lot to think about after divorce, and that includes thinking about your Qualified Domestic Relations Order(s) (QDRO), which will divide your retirement plan(s). You may have questions after your QDRO is filed and sent to your retirement plan: What are both parties’ rights, responsibilities and next steps? What should the participant (aka member or employee) and the former spouse (aka nonmember, alternate payee, payee) expect and do?
Once the QDRO is completed, what rights does the former spouse have?
A former spouse has the right to receive plan information and materials to understand the benefits the former spouse will be receiving to make informed decisions on how he or she will receive benefits.
How long will it take to hear from the plan after it receives the QDRO?
Generally, the former spouse should expect to receive plan information and/or a distribution package within 30 to 60 days following the plan’s final approval of the QDRO. Since each plan has different administrative policies there is no perfect answer to this question.
When is the earliest time a former spouse can start a pension benefit with a QDRO?
If the QDRO divides a defined contribution plan (e.g. 401k), in almost all cases the former spouse should arrange to receive funds as soon as administratively possible.
If the QDRO divides a defined benefit plan and the participant is NOT retired yet, the former spouse may choose to start the pension generally once the participant is at least age 55. In most cases, the former spouse may elect to receive benefits once the participant reaches earliest retirement age (which is almost always age 55) through the date the participant starts the pension.
If the QDRO divides a defined benefit plan and the participant is retired, the former spouse should contact the plan and arrange to receive funds as soon as administratively possible.
If the participant is not retired, will the plan contact the former spouse to tell the former spouse that he or she is eligible to start the pension?
If the QDRO divides a defined benefit plan, which may pay early retirement benefits once the participant reaches a certain age (generally age 55), the plan will not notify the former spouse that he or she is eligible to start the benefits. Therefore, it is your responsibility to learn when the plan will permit an early distribution, to request an estimate of what the monthly benefit will be, and to notify the plan when you want payments to begin.
Will a plan give the former spouse an estimate of the value of the participant’s retirement benefit?
Generally, once the QDRO is sent to the plan, the plan will provide the former spouse an estimate of the former spouse’s share of the retirement benefit.
Once the QDRO is sent to the plan, what other responsibilities does a former spouse have?
It is always the former spouse’s responsibility to notify the plan of any change of address so that you receive updated information and materials concerning your benefits. Also, if the QDRO provides that the former spouse has the right to designate a beneficiary, the former spouse must contact the plan immediately once the QDRO is sent to the plan and complete the proper beneficiary designation forms.
What happens if the plan does not respond to the QDRO or does not provide information regarding the former spouse’s rights to the retirement benefits?
Should any issues arise with the plan failing to respond to the QDRO or failing to provide information concerning the former spouse’s rights to benefits, one remedy is to contact the Department of Labor which has multiple offices throughout the U.S. Every Department or Labor office has a department that handles pension division issues.
What happens if a divorced participant does not update beneficiary forms?
After divorce, the participant of a retirement benefit should review the participant’s beneficiary designation and make any necessary and possible changes by completing a new beneficiary designation form. A U.S. Supreme Court decision held that even if the divorce judgment revokes the beneficiary designation of the former spouse, unless the participant changes that beneficiary form with the plan, the plan will be required to distribute benefits to the former spouse. (Kennedy v. Plan Adm’r for DuPont Sav. & Inv. Plan, 555 U.S. 285, 129 S. Ct. 865, 172 L. Ed. 2d 662 (2009).)
I hope this article breaks down the most important pieces to understand once your QDRO has been filed and sent to the plan. If you have additional questions about the process or want to speak with a QDROCounsel expert, please don’t hesitate to reach out via our website. (Please be sure to mention Hello Divorce to ensure your 15-minute call is free!)
Please note that this resource is meant for informational purposes only and does not constitute legal advice. Reading this blog does not create a lawyer-client relationship with Levine Family Law Group, Hello Divorce, QDROCounsel, LLC, and QDRO Benefits Law Group. This blog is written from the perspective of existing law and all attempts are made to be accurate and current on all legal developments. However, please do not make decisions that will affect your future based on things you’ve read on our website. Instead, consult with a Certified Family Law Specialist, like those of LFLG – or any other you prefer – For QDRO specific questions, consult with QDROCounsel, LLC or QDRO Benefits Law Group – or any other QDRO specialists you prefer. However, be sure to seek out sound legal advice that pertains specifically to the facts of your case.