QDROs

With over 30 years of legal experience and a certified specialty in family law, the attorneys at Richard Ross Associates have the knowledge, skill, and background to handle even the most complex issues which may arise in a divorce proceeding, including the relationship of Qualified Domestic Relations Orders (QDROs) and pension plans to the question of property division under California's community property laws.

What is a QDRO?

Pensions and other forms of deferred compensation such as 401(k) plans and stock options are subject to California's community property laws, as are most other assets acquired between the dates of marriage and separation.  However, many pensions and other plans are governed by laws which generally prohibit the employee from assigning or transferring his or her interest in the plan to another party.  In order to protect spouses who have an interest in the benefits plan under community property laws, a limited exception was created allowing an employee's interest in a plan to be divided with another pursuant to a "Qualified Domestic Relations Order" (QDRO).  The QDRO tells the benefits plan administrator handling the account to divide the interest in the plan between the employee and spouse in accordance with the Order.

Not all retirement plans require a QDRO.  For instance, a QDRO is not needed to divide assets in Individual Retirement Accounts (IRAs).  IRA assets may be transferred between spouses without incurring tax liability if the transfer is made pursuant to a written divorce decree or Marital Settlement Agreement.  Also, it is possible in some instances for the parties to divide a deferred compensation account through a "cash out" approach as an alternative to using a QDRO.

The question of whether a QDRO is required in a particular case depends upon several factors.  Generally, a QDRO is required to divide Defined Benefit Plans (pensions and retirement plans) and Defined Contribution Plans (profit sharing and 401(k) plans).  Although QDRO rules do not apply to Governmental Plans, a different type of court order is still required in most cases to divide these benefits.

QDRO compliance requires close attention to detail and careful legal review and plan interpretation.  Not all family law attorneys and divorce lawyers are qualified to handle QDROs.  If pension plans and other benefits figure into your marital estate, make sure your attorney can deal with these issues.  In Ventura County and Southern California, contact Richard Ross Associates to discuss whether a QDRO will need to be considered as part of your divorce.