First, we must answer one question: What is a QDRO? A QDRO is a qualified domestic relations order. It is part of property division when two people get divorced. But not all divorces will need a QDRO, and not all divorce attorneys handle them.
QDROs apply to private sector pensions covered by the Employee Retirement Income Security Act (ERISA). Similar orders divide military retirement pay as well as civil service retirement plans. QDROs can be separate documents or part of a divorce decree.
The court first determines if the pension is part of the marital property. The pension fund administrator then determines whether the specific pension plan can be disbursed to someone other than the person who earned the pension and how that disbursement will work. Typically, the funds from the pension will roll over into an IRA for the former spouse.
Jobs that still offer a pension
While pensions used to be a matter of course, today fewer than 20% of U.S. jobs currently offer a pension. These jobs include teachers, nurses, police and fire, military and union workers.
Those who work federal, state, and municipal jobs, utilities, and transportation also typically get a pension. Right now just about half of large pharmaceutical companies also still offer employees a pension, according to a 2019 article by U.S. News & World Report.
Five QDRO facts
- A QDRO cannot conflict with the current divorce distribution order.
- Benefits to the payee cannot increase.
- Though issued by a judge, it is actually the plan administrator who approves a QDRO.
- A QDRO can only be dispersed to specific people: the account holder’s former spouse, a child or dependent, or a guardian of a minor dependent.
- A QDRO does not necessarily ensure that these funds will be split 50-50. A judge decides the actual amount.
Does your divorce include a pension? If so, you may wish to consult with a Pennsylvania divorce attorney who has experience and knowledge with this type of asset.