What is a QDRO and how do I get one in a Texas divorce?

WHAT IS A QDRO & HOW
DO I GET ONE IN A
DIVORCE INTEXAS?
The Kielich Law Firm | 2205 Martin Drive
Suite 200-K, Bedford,Texas 76021 | 817.857.1123
www.kielichlawfirm.com

Qualified Domestic Relations Order
■ QDRO = Qualified Domestic RelationsOrder
■ Special order dividing retirement plan benefits in a plan governed by ERISA for the
purpose of awarding a share of marital property, payment of child support or payment
of spousal support
■ Some non-ERISA plans borrow the term QDRO—some state and local government
plans
■ Ordered in a divorce or SAPCR inTexas
What is a QDRO? Presented byThe Kielich Law Firm www.kielichlawfirm.com

What is ERISA?
■ ERISA = Employee Retirement Income Security Act of 1974
■ Federal law enacted to protect employer-sponsored retirement benefits from
employer mismanagement, fraud and bankruptcy
■ Enacted after car manufacturer Studebaker went bankrupt and employee pension
benefits disappeared
■ What is the relationship between ERISA and aTexas divorce?

Anti-Alienation Provision
■ ERISA prohibits an employer from assigning or paying out benefits accrued under a
covered plan to anybody but the employee or the employee’s beneficiaries (upon the
employee’s death)
– This is the anti-alienation provision
■ The provision includes an exception for QDROs
■ Without the QDRO exception state courts would be unable to enforce an award of
marital property or child/spousal support from retirement plan assets
– Often the only source of liquid funds

What does a QDRO contain?
■ QDRO provides instructions to the plan administrator how to divide defined benefit or
defined contribution benefits and pay the segregated portion to the recipient (known
as an alternate payee)
■ Includes a specific amount (if it can be paid by the plan in that manner) or a formula to
calculate the segregated portion
■ Includes instructions on timing and method of payment to alternate payee
■ Important:QDRO instructions and calculations must fall within the universe of the
plan rules—cannot order payment of benefits that do not exist, payment in method
not permitted by plan, or at a time not permitted by the plan

What if no QDRO?
■ Without a domestic relations order that can be qualified under the plan rules the plan
administrator cannot segregate or pay out anything to the alternate payee
– Anti-alienation provision
■ Award still valid but the plan administrator cannot make payment
■ Alternate payee must find money from plan participant—much more difficult to track
down and capture payment once the plan pays it out

How do you get a QDRO in aTexas
divorce?
■ QDRO is a court order so it must be signed by a court with jurisdiction over your
divorce
■ Two ways to get signed
■ At the same time the judge signs the divorce decree
■ Or later after filing a motion to enter QDRO

QDRO with the final divorce decree
■ InTexas a judge can grant a QDRO at the same time the divorce is granted
■ Makes sense to deal with property division order at same time as divorce decree
■ No additional court fee to signQDRO at this time
■ However, sometimes QDRO not prepared at same time, waiting for plan administrator
to approve QDRO draft and want to get divorced beforehand, or divorce lawyer does
not draft QDRO—in that case must get signed later

QDRO later
■ Under theTexas Family Code the court has continuing jurisdiction to sign a QDRO
indefinitely
■ But more than thirty days after divorce decree is signed the party seeking a QDRO
must file a motion to enter QDRO, pay a filing fee and serve the participant with the
motion
– If the QDRO is contested then a hearing must be set and the judge may hear
evidence and arguments on the QDRO
■ As a result: more expensive, more time wasted, delayed distribution from plan—also…

There is a danger
■ Until the plan receives a QDRO it cannot distribute funds to the alternate payee
■ Participant remains in control
■ Participant may take money from plan before the plan administrator receives QDRO—
once that happens the QDRO is worthless
■ Have to chase down the participant and hope he or she has money to pay award
■ If the participant has no money then there is nothing to give to the alternate payee

Other problems
■ What happens if participant remarries before the plan administrator receives a QDRO?
– In most cases not a big problem but for defined benefit pension plans this can be a
serious problem
– If participant remarries and commences payment then survivor benefits due to the
former spouse in the divorce may be reverted to the new spouse under the plan rules
■ What happens if the participant dies before the plan administrator receives a QDRO?
– Court can still issue a QDRO but may run into similar problems with survivor benefits
or prior payment to beneficiaries

Bottom Line
■ In 99.999999999999999% of divorces inTexas you should get the court to sign a
QDRO with the divorce decree or within thirty days of signing the decree
■ Very, very rarely any meaningful reason for the alternate payee to delay
■ No benefit to taking on risk participant takes payment first, remarries, or dies

What if divorce lawyer will not draft
QDRO?
■ Many divorce lawyers will not draft QDROs—do not consider themselves experienced
enough with ERISA or retirement plans to competently draft
■ Often divorce lawyers refer QDRO drafting out to attorneys who draft QDROs or
companies that specialize in drafting QDROs
■ In that case QDRO should be ready to go with divorce decree
■ Sometimes divorce lawyer will not get involved with QDRO at all
■ In that case need to find QDRO lawyer to draft ASAP

How to find QDRO lawyer inTexas?
■ Internet search makes it easy
■ Divorce lawyer may have referral to provide
■ Non-lawyer referrals

What about non-ERISA plans?
■ SomeTexas andTexas city plans require QDROs under state or municipal regulations
■ Similar QDRO requirements—often requires specific forms
■ Many private employer and federal plans do not fall within ERISA
– Usually needs specific order language in divorce decree or other order
– May call itself a DRO or QDRO
– But not ERISA-requiredQDROs

Questions?
■ For more information about QDROs visit http://www.kielichlawfirm.com/family-
law/qdro
■ For more information about retirement plan benefits visit
http://www.kielichlawfirm.com/employment-law
■ Also visitThe Kielich Law Firm blog at http://www.kielichlawfirm.com/blog
■ Adam Kielich is an employment lawyer, divorce lawyer and QDRO lawyer representing clients across the Dallas and Fort
Worth area. He is the managing attorney ofThe Kielich Law Firm in Bedford,Texas. Licensed to practice in all state courts in
Texas and the district courts of the U.S. Northern District ofTexas.
■ Information in this presentation is of a general nature. It is not legal advice. Legal issues are fact specific and general
information may not be applicable to a given situation.Consult an attorney in your area about any legal question or issue.
You are responsible for your use of this information.

What is a QDRO and how do I get one in a Texas divorce?

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