The U.S. Department of Labor defines a Qualified Domestic Relations Order (QDRO) as a “domestic relations order that creates or recognizes the existence of an alternate payee's right to receive, or assigns to an alternate payee the right to receive, all or a portion of the benefits payable with respect to a participant under a retirement plan, and that includes certain information and meets certain other requirements.” Thus, QDRO’s must comply with Federal Government requirements before they are valid. For purposes of QDRO’s, the alternate payee cannot be anyone other than a spouse, former spouse, child, or other dependent of a participant.
Domestic Relations orders, QRO’s, on the other hand, are court orders that usually deal with things like child custody, spousal and child support, property division (including retirement benefits), etc. This order is a part of a divorce decree that a state family law judge issues, and it has nothing to do with the federal law that governs QDRO’s. In other words, even though it may be valid under state law, a QRO cannot provide for the division of pension benefits unless it meets the federal requirements for a QDRO. If you are not confused yet, please wait!
In order for a QDRO to be valid, it must contain the following information:
- The name and last known mailing address of the participant and each alternate payee
- The name of each plan to which the order applies
- The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee, and
- The number of payments or time period to which the order applies. See ERISA § 206(d)(3)(C)(i)-(iv); IRC § 414(p)(2)(A)-(D).
Moreover, federal law does not require that QDRO’s be part of a divorce decree. Indeed, often a divorce decree will only mention that one of the parties (usually the one who has earned the retirement benefit) will draft and enter a QDRO with the court at some specified date in the future. If they do not, the other party can file for contempt proceedings.
QDROs are very specific and require professional help. If you are facing a divorce that involves the division of retirement benefits, you should seek the help of an experienced Illinois family law attorney.