It is important to have competent legal counsel when it comes to the preparation of Domestic Relations Orders due to various complex issues which must be addressed, depending upon the type of retirement plan involved.
The division of retirement benefits acquired by one or both parties during a marriage is often an essential part of the property settlement in divorce proceedings. Many retirement plans require a separate Court Order, known as a “Domestic Relations Order” (DRO) or a “Qualified Domestic Relations Order” (QDRO) which serves to direct the administrator of a pension plan to distribute a certain amount of an employee’s pension to his/her non-employee ex-spouse following the filing of a Judgment of Dissolution with the Court.
Domestic Relations Orders are routinely required for 401K Plans, 403(b) Plans, 457 Deferred Compensation Plans, Profit Sharing Plans, Employee Stock Ownership Plans, and Governmental Plans such as CalPERS, CalSTRS, OCERS, LACERA, etc.
A Domestic Relations Order must comply with state domestic-relations laws, as well as the Employee Retirement Income Security Act of 1974 (ERISA). Therefore, it critical to have a well-drafted Domestic Relations Order. The Order should specify the dollar amount or percentage (or the method of calculating the amount or percentage) of the benefit to be paid to the alternate payee, and should include various other provisions relevant to the specific plan. For example, some DROs should clearly indicate whether gains and losses from the date of division to the date of distribution will be applied to the alternate payee’s portion, or whether or not any outstanding loans against the plan will be included in the calculation of the community interest in the benefits. Contributions made to the plan after the date of division that are attributable to periods prior to the date of division should also be addressed. Provisions relating to survivor benefits, early retirement benefits, post-retirement cost-of-living increases, and the application of tax-deferred benefits in the event the plan is paid as a disability pension may also be necessary.
Because of the complex details which must be addressed in a Domestic Relations Order, it is important to have competent legal counsel regarding this issue. For 30 years, the Shuff Law Firm has skillfully prepared countless Domestic Relations Orders to facilitate the division of retirement benefits for nearly every form of retirement plan. We have the knowledge and expertise to assist you in the preparation of a Domestic Relations Order that will properly protect your interests in all retirement benefits awarded to you.
