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Another way to keep the fees down in your divorce

When there is retirement to be divided as part of the divorce settlement, here is how you (the client) can do some of the legwork and keep costs down.

There are two kinds of retirement accounts: a “defined benefit plan” (like a pension), where the employer will pay a set sum of money for a set period to a former employee and a “defined contribution plan” where the amount of the benefit equals the contributions made by the account holder and any employer match (like a 401(k) or an IRA).

If you are a participant in a pension plan or a 401(k) or any other employer-sponsored plan, at the beginning of the case, you should talk to your benefits department about getting a “Summary Plan Description” for any-such plans and give that document to your attorney.

You should also find out what documents will need to divide the retirement – most often, the employee’s interest in a defined benefit plan is divided by a Qualified Domestic Relations Order, usually called by its shorthand name of “QDRO” (said by pronouncing the letters by their names – Q-D-R-O). Many companies have a form QDRO and will send it to you on request. This is something that both attorneys will need at the conclusion of the case to effectuate the division of the defined benefit plan.

Most, if not all, defined benefit plans include a choice of whether or not to classify the non-employee spouse as a “surviving spouse.” “If the former spouse is named as a surviving spouse, payments under the plan will continue to him or her even after the death of the plan participant. It must be noted that the designation of someone as the surviving spouse means two important things: (1) the benefits of the participant spouse will be reduced and it is important to find out how much that reduction in benefits will be so that information can be used during settlement negotiations and (2) generally, no future spouse may be named as the surviving spouse, even if the person originally named as the surviving spouse has predeceased the participant spouse.

The procedures for a defined contribution plan vary from Plan to Plan. Some require only a copy of the judgment dissolving the marriage, some require a certified copy of the judgment and some require a QDRO. This information can be found out from the benefits department of the company if it is a company sponsored plan like a 401(k) or a 403(b) or from the mutual fund or other company that holds the IRA.

The drafting of a QDRO requires special knowledge and should only done by an attorney experienced in such matters.