Qualified Domestic Relations Order Services
A very significant portion of negotiating a property settlement can include the preparation of an enforceable qualified domestic relations order (QDRO). Parties are often compromised immediately and in the long-term as this step is often overlooked and badly managed. Because a qualified domestic relations order is such an important document, you should work with a knowledgeable and experienced divorce attorney to obtain one.
A QDRO is the document that can effectuate division of retirement account or pension plan assets. A QDRO governs all types of retirement accounts including employee-sponsored pension plans,401(k) and 403(b) plans to TIAA/CREFs. In addition, State and Federal civil severance plans, IRAs, and military retirement pay are governed by similar Orders. It is the binding legal judgment that dictates terms of the payment to the alternate payee upon retirement.
In addition to ordering plans to pay benefits to a new payee, a QDRO may also ensure that neither party is disproportionately impacted by taxes by allocating taxes either at the time of settlement or after. Once the judge has signed the order, Veralynn Morris, our CDFA®, will be able to assist you individually and your legal team by adding her financial expertise to complement the execution of the terms of the QDRO. Ms. Morris assists to assure that the retirement assets are actually transferred by the Plan from the participant’s account to the alternate payee in the investment option most suitable and of the Alternate Payee’s choice. She is licensed to give investment advice and can counsel you from a financial standpoint the most suitable investments for the client. Based on three decades as a financial services professional, Veralynn, can aptly advise you of your financial choices and make sure they are implemented properly. Ms. Morris is not a lawyer and cannot provide you with legal advice regarding the QDRO. She can, however, offer financial guidance and advice to you in connection with the division of retirement assets.
1. Is there a Sense of Urgency to have a QDRO prepared?
Some 401k and related plans, such as a TSP and pensions require the preparation of a QDRO expediently regarding the asset or pension division. Parties can agree to divide prior to retirement. Though it may seem to make sense to delay pursuing a QDRO until your former spouse begins receiving their benefits, this is a mistake that could cost you important rights to your portion. If your former spouse experiences certain life events before you obtain a QDRO, you may lose all your rights to receive benefits from their plan. These unanticipated life events include:
- Voluntary/Involuntary Termination
- Remarriage; and
Should you have questions regarding the legal implications or preparation of a QDRO or its impact on your divorce, you should consult an attorney. Divorce Financial Solutions, however, will work with you and an attorney to ensure that, once a QDRO is entered by the Court, your retirement funds are correctly allocated to financial tools such as IRAs, 401(k)s and other defined contribution plans.
At Divorce Financial Solutions, we offer services to clients in the following Maryland jurisdictions: Frederick, Washington, Allegany, Garrett, Howard, Carroll, Montgomery, Prince Georges, Anne Arundel, St. Mary’s, Baltimore and Harford Counties.