Texas Family Law: Understanding QDROs
A qualified domestic relations order, or QDRO, is a legally enforceable court order signed by a judge that explains how a retirement plan’s benefits are going to be split up in a divorce, as well as directs how they will be distributed.
If you are going through a divorce, and you or your spouse have a retirement plan that will need to be split up, you can expect to have a QDRO as part of your settlement. Understanding what these orders are, how they work, and why they are so important is critical for moving forward with your divorce.
What is Included in a QDRO?
A QDRO can have a few different items listed within it. Some of the key pieces of information that all of them should have include:
- Name, Social Security number, and the latest address of the divorcing individuals
- Information about the retirement plan(s) in question
- Amount that the non-participant spouse will receive
- Details about how the payout will occur (lump sum vs. payments, over how many years, etc.)
QDROs Don’t Cover All Retirement Plans
QDROs are set up to handle a variety of different types of retirement plans including IRAs, 401(k)’s, and more. They cannot, however, be used to split up government or military retirement plans. This is an important limitation that is in place, and one that many people will need to consider before going to court.
How Payment Amount is Calculated
In most cases, Texas courts will include a formula for how to calculate payment amounts in the QDRO rather than a set dollar amount. This is important because the dollar amount in a retirement account can fluctuate significantly over time, which could cause some serious issues for both parties. By granting the non-participant a percentage of its current value, for example, it becomes easier to determine the amount that will go to the non-participant spouse.
All other things being equal, Texas courts will typically split retirement plans 50/50 if the plan was started after the marriage began. If the plan was in place prior to the marriage, then the plan owner will likely be able to keep a greater percentage of the plan. A divorcing couple can, however, work out a mutually agreed-upon arrangement for how the retirement plans will be split, and unless there is a serious reason not to, the Texas judge will approve it. It is therefore in your best interest to try to work it out with your spouse first (with the help of qualified attorneys), before going to court. You and your spouse will be able to exercise some form of control over the divorce this way.
Whether you are negotiating during mediation or battling it out through litigation, having an experienced Texas family law attorney by your side is the best way to ensure you get a fair judgement. Contact The Dieye Firm to go over the details of your case and learn how we can help protect your rights throughout your divorce.