When a couple is getting divorced in Austin, they will need to divide their community (shared/marital) property in a manner that is just and equitable, but not necessarily equal.
In addition to the obvious property types, like cars, bank accounts, and a shared home, a couple needs to consider things like stocks, investments, and retirement accounts.
If you are getting a divorce, the term “QDRO” or “qualified domestic relations order” is one that you should familiarize yourself with.
Here’s what you need to know about a qualified domestic relations orders, Texas laws regarding QDROs, and how our Austin divorce attorney can help.
What Is a Qualified Domestic Relations Order?
A qualified domestic relations order in Texas is a legal order, signed by a judge at the time that you and your spouse divorce, or soon after, that orders your or your ex-spouse’s retirement plan administrator to divide retirement benefits according to your divorce judgment.
Before an adminstrator will divide a retirement account per your domestic relations order (i.e. your divorce settlement), they must know that the order is “qualified.” As such, a QDRO must be presented. Your Texas QDRO will contain important information needed to qualify the domestic relations order.
Do I Need a QDRO in Texas?
You may think that your divorce decree is all you need to collect your share of your spouse’s retirement. However, the divorce decree binds only you and your spouse, not other third parties.
On the other hand, a QDRO in Texas specifically orders retirement plan administrators to cooperate in distributing funds according to the terms of your decree. Thus, if your divorce decree awards you a share of a defined benefit, 401(k), profit-sharing, or another qualified retirement plan, it is essential that you have a QDRO so you can collect your share.
How Can I Obtain a Qualified Domestic Relations Order?
Keep in mind that there are two parts to the QDRO: the domestic relations order, (DRO) and the qualified part of the DRO.
A DRO divides the retirement accounts and dictates what portion of a spouse’s retirement plan the other spouse will receive. This is something that you and your spouse can negotiate privately. Or you can ask a court to decide for you. In either case, the judge must sign off on the agreement/order before it goes into effect.
To qualify your DRO, you need to make sure that it contains all the information necessary for the retirement plan administrator to distribute the funds. You can accomplish this by sending your proposed QDRO to the plan administrator for approval.
Once the administrator has verified that your QDRO contains all the necessary information, you can submit it to the court for final approval. The court will then sign your QDRO, making it an official court order. At that point, you will submit the final signed order to the plan administrator, and the administrator will distribute funds accordingly.
Information Needed to Qualify a DRO
You qualify your DRO by providing essential information about how the plan is to be divided, including:
- The name of the member spouse participating in the retirement plan;
- The name of the “alternate payee”—the non-member spouse who is entitled to a portion of the retirement;
- The last known address of each spouse;
- Each spouse’s social security number;
- The percentage of the retirement plan or dollar amount the administrator needs to pay to the alternate payee, or a method of calculating the amount; and
- The number of payments or period of time to which the order applies.
As long as your Texas QDRO includes this essential information, it should be accepted as qualified by the plan administrator. However, the QDRO cannot direct the administrator to pay in a manner that is against the law or plan rules.
Legal Limitations on QDROs
Courts have the authority to divide retirement plans in a divorce and direct a plan administrator to distribute funds accordingly. However, they do not have the authority to alter the terms of a retirement plan. For example, a QDRO in Texas cannot:
- Change the schedule for distributing benefits;
- Increase or decrease benefits;
- Create new benefits;
- Change plan rules;
- Change vesting requirements; or
- Assign to an alternate payee benefits that have already been assigned to another payee.
If your QDRO purports to do any of these things, it is unqualified.
Do I Need an Attorney to Complete My QDRO?
It’s always best to have an attorney complete your QDRO. Online forms can provide a starting point, but they don’t give much guidance for complying with individual plan rules.
Proposed QDROs can be rejected for even minor mistakes. Additionally, some plans require you to use particular forms or have unusual plan rules you need to be aware of. An attorney can help you get your QDRO right the first time and reduce unnecessary delays.
When Will I Get My Retirement Money?
A QDRO does not change the timeline for collecting retirement benefits. You will collect your share of benefits when they are due for distribution to your spouse.
If your spouse has already retired, you could start collecting benefits as soon as the court signs your QDRO and the plan administrator is able to process it. In that case, you will want to complete your QDRO as soon as possible.
If retirement is still a few years off for your spouse, your lawyer may take a little more time to complete the QDRO. The plan administrator will keep the QDRO on file after receiving it. You can then expect to receive your share of benefits automatically when your ex-spouse becomes eligible to collect.
How Our Experienced Austin Divorce Lawyer Can Help
Understanding how to divide assets, including retirement benefits, in a divorce can be complicated enough. Trying to figure out how you’ll actually get the retirement benefits owed to you after a divorce can be overwhelming.
At the Law Office of Ben Carrasco PLLC, our experienced Austin divorce lawyer can help you to understand Texas’s property division laws, how to negotiate your divorce settlement, and how to obtain a QDRO to ensure you’re paid.
To learn more about how we can assist you and how you can benefit from working with an attorney, please call us today or contact us directly by sending us a message.