Your QDRO Roadmap

It may be a very difficult, frustrating venture to navigate through the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code,  various state law, and separate retirement benefit plan rules that employers may have. There is no perfect Qualified Domestic Relation Order and every draft will be unique. Each familial situation and employer benefit plan are different requiring much thought to be put into any division of retirement that may occur. Knowing this, you can make the process more manageable by identifying what you can and cannot include in the order to streamline this procedure. While this roadmap is not exhaustive, it should give you a good idea of what should and should not be included in an order helping you get started.

First, determine what your Order is:

Ensure your plan administrator determines whether the order is as draft order or an executed order. The distinction here is important, because if the order is a draft, then you will need to double check to make sure that your administrator reviewed the order to make sure that there were no corrections that needed to be made before requesting that the order be executed by the Court. On the other hand, if the order has already been executed, then it should be reviewed for qualification status.

Before moving towards qualification, your order should ensure that this order includes a few things such as:

• The order is issued under your state’s domestic relations law.  Each state has its own requirements so any judgement, decree, or order must be drafted in accordance of such.

• The order must also be related to child support, alimony, or marital property rights. The property rights must be those of either a spouse, former spouse, child, or dependent.

• The order must be issued by the State Court, which has the authority to do so.

Make sure it is ready for Qualification

They should document when the order was received and review the document in a timely manner to ensure that it is qualified. Every qualified order must contain certain provisions. Make sure that each order contains:

• The name of the retirement plan

• The full name and last known mailing address of the plan participant

• The full name, last known mailing address, and status whether the be child, spouse, child, dependent, or former spouse of each alternate payee

• The percentage or amount of the benefits that are to be paid to the alternate payee as well as the duration for which the order applies.

• Directions to the benefits provider requiring payment to the alternate payee.

Make sure these are left out:

Including certain items in the order will cause it to be unqualifiable . Usually, these items require a plan to do something other than what is acceptable by Federal or State standards. By avoiding these common pitfalls, you will be well on your way to wrapping up this process. These items include:

• Bare with me here, this one  may seem obvious to some but is often not considered. Plans may not be required to pay a value that is in excess of what the plan participant is entitled to receive. In this same vein, the order cannot require that the plan pay any benefit that the participant is not entitled to receive.

• Unless the plan allows, the alternate payee cannot order for the benefit form to be changed from what the plan participant is already receiving.

• Payment of these plans are divided on a first come first serve basis. These plans cannot be required to be paid to an alternate payee when another alternate payee is receiving the payments from another Qualified Domestic Relations Order.

• Remember, Qualified Domestic Relation Orders are governed by ERISA, and as such, must not require that payments be made in a form not permitted by the statute.

Remember, this list is not exhaustive! There is information that is specific to certain types of benefit plans such as Defined Contribution Plans that will change what is required in a QDRO. However, following this checklist with your plan administrator will help catch many common mistakes that are made and get you on your way to the next stage of your life.Your QDRO Roadmap It may be a very difficult, frustrating venture to navigate through the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code, various state law, and separate retirement benefit plan rules that employers may have. There is no perfect Qualified Domestic Relation Order and every draft will be unique. Each familial situation and employer benefit plan are different requiring much thought to be put into any division of retirement that may occur. Knowing this, you can make the process more manageable by identifying what you can and cannot include in the order to streamline this procedure. While this roadmap is not exhaustive, it should give you a good idea of what should and should not be included in an order helping you get started. First, determine what your Order is:Ensure your plan administrator determines whether the order is as draft order or an executed order. The distinction here is important, because if the order is a draft, then you will need to double check to make sure that your administrator reviewed the order to make sure that there were no corrections that needed to be made before requesting that the order be executed by the Court. On the other hand, if the order has already been executed, then it should be reviewed for qualification status. Before moving towards qualification, your order should ensure that this order includes a few things such as: The order is issued under your state’s domestic relations law. Each state has its own requirements so any judgement, decree, or order must be drafted in accordance of such. The order must also be related to child support, alimony, or marital property rights. The property rights must be those of either a spouse, former spouse, child, or dependent. The order must be issued by the State Court, which has the authority to do so. Make sure it is ready for Qualification They should document when the order was received and review the document in a timely manner to ensure that it is qualified. Every qualified order must contain certain provisions. Make sure that each order contains: The name of the retirement planThe full name and last known mailing address of the plan participantThe full name, last known mailing address, and status whether the be child, spouse, child, dependent, or former spouse of each alternate payeeThe percentage or amount of the benefits that are to be paid to the alternate payee as well as the duration for which the order applies.Directions to the benefits provider requiring payment to the alternate payee.Make sure these are left out: Including certain items in the order will cause it to be unqualifiable . Usually, these items require a plan to do something other than what is acceptable by Federal or State standards. By avoiding these common pitfalls, you will be well on your way to wrapping up this process. These items include: Bare with me here, this one may seem obvious to some but is often not considered. Plans may not be required to pay a value that is in excess of what the plan participant is entitled to receive. In this same vein, the order cannot require that the plan pay any benefit that the participant is not entitled to receive.Unless the plan allows, the alternate payee cannot order for the benefit form to be changed from what the plan participant is already receiving.Payment of these plans are divided on a first come first serve basis. These plans cannot be required to be paid to an alternate payee when another alternate payee is receiving the payments from another Qualified Domestic Relations Order.Remember, Qualified Domestic Relation Orders are governed by ERISA, and as such, must not require that payments be made in a form not permitted by the statute. Remember, this list is not exhaustive! There is information that is specific to certain types of benefit plans such as Defined Contribution Plans that will change what is required in a QDRO. However, following this checklist with your plan administrator will help catch many common mistakes that are made and get you on your way to the next stage of your life.