Understanding QDROs

If you file for divorce when you’re in your twenties or even thirties, you’re probably not thinking about retirement. However, creating the foundation for a financially stable future is an important part of starting over, and one of the best ways to gain that security is to obtain a qualified domestic relations order (QDRO). 

What is a QDRO?

A QDRO is a legal order that acknowledges or creates the right of an alternate payee to receive benefits payable to a participant under a retirement plan. They are issued in family law cases such as divorce, legal separation, or child support petitions. Alternate payees can be a current or former spouse, children, or other dependents that a participant may have.

QDROs deliver two primary financial protections. First, they ensure that the payee directly receives all required payments, preventing the plan participant from disposing of the payee’s share of the pension. The second is that they make sure that each former spouse or partner is assigned a proportionate share of the tax liability.

How are QDROs Treated in a California Divorce?

In California, the income that you and your spouse earn is considered community property. Any retirement benefits derived from these earnings are also community property and, as such, subject to division in divorce. 

Examples of applicable deferred employment compensation include qualified pensions, 401(k)s, and IRAs. In some cases, you and your spouse can use an agreement to settle the division of marital property, while in others a QDRO may be necessary to split the pension.

What About Social Security Benefits?

People often ask if Social Security benefits are divisible as marital property, given that the work credits were earned during the marriage. The answer is no. This income is taken into account when calculating child support or spousal maintenance and it may be garnished to pay these obligations, but in cases like these, a QDRO is not involved.

What About Military Pension Division?

Dividing military pensions is more complicated. First of all, there is a ‘10/10 requirement,’ meaning that for the Defense Finance and Accounting Service (DFAS) to automatically send you payments, you and your military spouse must have been married for at least 10 years, during which time they must have performed at least 10 years of active duty service. If this requirement is satisfied, the payments from the DFAS will be limited to 50% of your former spouse’s disposable military retired pay, which is their retirement pay minus less disability pay, any federal debts, and annuity premiums for any applicable Survivor Benefit Plan.

How is the Alternate Payee Share Calculated?

There is no set formula for calculating your share of your spouse’s pension. Retirement benefits often involve a combination of community and separate interests, meaning that some of the benefits were earned while your spouse was single and the other part during the marriage. Your California family law attorney will work to ensure that you receive a share that reflections your contributions to the marriage. 

Do You Need Help With a California QDRO?

At the Grey Legal Group, APC, we help clients secure their future by drafting QDROs that let them access their well-earned share of a spouse’s retirement benefits. If you are filing for divorce or even need help drafting a QDRO for a divorce that has already occurred, we’re here to help. For more information or to meet with an attorney, please contact us.

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The Grey Legal Group, APC

At The Grey Legal Group, we take pride in getting to know our clients personally. Whether you’re going through a divorce, child custody issues, or problems enforcing divorce orders, you can feel confident in our knowledgeable, hands-on approach.

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