Retirement Plan Transfers
Once you are divorced, you may need to divide retirement assets between you and your former spouse. Retirement accounts can be marital property, but they can only be held in one person's name. Certain types of retirement benefits, for example, pensions, IRAs, 401(k) accounts and others may require a separate court order called a QDRO or QILDRO
to divide the benefits between spouses. QDROs and QILDROs have specific requirements and must comply with federal and state law and be approved by the plan administrator of the company holding the retirement benefits.
What is a QDRO?
QDRO is an acronym for Qualified Domestic Relations Order. This is a specific type of court order that gives a spouse (referred to as the "alternate payee") a portion of the retirement benefits that are held in the other spouse's name (referred to as the "participant").
After the parties or the judge decides how the property will be divided, the Court will formally adopt and then enforce a final property division between the parties. The attorneys will then draft and enter a QDRO that complies with the law and is approved by the plan administrator that is holding the retirement benefits. The QDRO directs the plan administrator in charge of the retirement benefits to pay the alternate payee and the participant according to the terms in the terms of the property division entered by the Court.
What is a QILDRO?
QILDRO is an acronym for Qualified Illinois Domestic Relations Order. A QILDRO is used to direct a plan administrator of an Illinois Public retirement system to pay benefits to an alternate payee in accordance with the terms of the property division. A QILDRO must comply with Illinois state law.
Why are QDRO's and QILDRO's so important?
If a QDRO or QILDRO is not entered by the Court and lodged with the plan administrator, the alternate payee may not receive the retirement benefits due under the divorce judgment. A QDRO/QILDRO should be completed as soon as possible after a Judgment for Dissolution of Marriage is entered to protect the alternate payee's benefits due to him or her.
For example, Wife has a pension that was acquired during the marriage and is marital property. The divorce decree states that the husband is to receive a percentage of the martial portion of the pension benefits due his wife. If the QDRO or QILDRO is never completed, the plan administrator will pay 100% of the benefits to the wife and nothing to the husband. Additionally, if the wife dies, the pension benefit could be deemed "paid," or given to a new spouse.
What is included in QDROs and QILDROs?
Both QDROs and QILDROs must contain contact information for the plan participant and the alternate payee, the exact name of the plan, and various other information regarding the division of the benefits between the participant and alternate payee. Different companies and plans may have their own requirements for what is to be included in a QDRO or QILDRO. It is best to consult an experienced family law attorney regarding requirements for a specific retirement benefit.
to divide the benefits between spouses. QDROs and QILDROs have specific requirements and must comply with federal and state law and be approved by the plan administrator of the company holding the retirement benefits.
What is a QDRO?
QDRO is an acronym for Qualified Domestic Relations Order. This is a specific type of court order that gives a spouse (referred to as the "alternate payee") a portion of the retirement benefits that are held in the other spouse's name (referred to as the "participant").
After the parties or the judge decides how the property will be divided, the Court will formally adopt and then enforce a final property division between the parties. The attorneys will then draft and enter a QDRO that complies with the law and is approved by the plan administrator that is holding the retirement benefits. The QDRO directs the plan administrator in charge of the retirement benefits to pay the alternate payee and the participant according to the terms in the terms of the property division entered by the Court.
What is a QILDRO?
QILDRO is an acronym for Qualified Illinois Domestic Relations Order. A QILDRO is used to direct a plan administrator of an Illinois Public retirement system to pay benefits to an alternate payee in accordance with the terms of the property division. A QILDRO must comply with Illinois state law.
Why are QDRO's and QILDRO's so important?
If a QDRO or QILDRO is not entered by the Court and lodged with the plan administrator, the alternate payee may not receive the retirement benefits due under the divorce judgment. A QDRO/QILDRO should be completed as soon as possible after a Judgment for Dissolution of Marriage is entered to protect the alternate payee's benefits due to him or her.
For example, Wife has a pension that was acquired during the marriage and is marital property. The divorce decree states that the husband is to receive a percentage of the martial portion of the pension benefits due his wife. If the QDRO or QILDRO is never completed, the plan administrator will pay 100% of the benefits to the wife and nothing to the husband. Additionally, if the wife dies, the pension benefit could be deemed "paid," or given to a new spouse.
What is included in QDROs and QILDROs?
Both QDROs and QILDROs must contain contact information for the plan participant and the alternate payee, the exact name of the plan, and various other information regarding the division of the benefits between the participant and alternate payee. Different companies and plans may have their own requirements for what is to be included in a QDRO or QILDRO. It is best to consult an experienced family law attorney regarding requirements for a specific retirement benefit.