Friday, August 14, 2009
Dividing a Washington Pension Using a QDRO (Qualified Domestic Relations Order)
Pension and other retirement benefits are generally considered property subject to distribution by the Court in a dissolution action. A pension plan can be divided in two primary methods. The first is to determine it's value and awarding it to one spouse. The second is to divide the benefit between the spouses, typically using a Qualified Domestic Relations Order (QDRO). Today, we will look at the second option.
The second method in awarding a pension is to use a Qualified Domestic Relations Order (QDRO) to divide the benefit now, so that both spouses will share the benefit at retirement age. The QDRO can award either a specified monthly dollar amount to be paid at retirement, or a percentage of the amount accrued or to be paid. This can be done with all qualified retirement plans, such as the Boeing Employee Pension or Boeing 401(k) (VIP), or retirement accounts of other businesses.
The QDRO must be signed by the Court, and a certified copy sent to the pension administrator. They must then decide if it is truly a "qualified" order. If not, they will typically send a letter explaining the problems, and it must be redrafted to meet the requirements of thier plan or the IRS. If it is approved, they will then process it in a timely fashion.
The same can be done with a 401(k) plan, where the QDRO can award a spouse an interest in the retirement benefit in a divorce without incurring any penalty and without any tax, as long as it is rolled over into another tax deferred vehicle (IRA).
A family law attorney can advise you on how retirement benefits can fit into a fair division of assets, and help in getting them valued. QDRO's need to be approved by both the court and the pension administrator. Be sure to have your QDRO reviewed by an attorney.
In my next entry, I will discuss the division of retirement benefits that are not "qualified" under the IRS regulations.
The Renton law firm of Mogren, Glessner & Roti, represents clients in a variety of family law cases, including the division of assets (like a pension) in a divorce. We have 4 attorneys for you to chose from. Please visit our web page at http://www.mgrlaw.com/ for more information.