I should know this....

[ERISAatty]

Hi, all,

I'm not a QDRO expert, and am confused:

A family member of mine divorced (in Indiana) shortly AFTER her spouse's DB plan entered payment, due to the spouse's retirement. A form of annuity was selected and commenced (in the form of a joint and 50% survivor annuity). My family member was named, at the time of the annuity selection, as the recipient of the future 50% interest. The divorce was relatively friendly, and both ex-spouses (both still living) agree that my relative should receive the future 50% interest.

At the time of the divorce, attorneys told her that no QDRO was needed, because the annuity was already in payment status. This advice strikes me as possibly wrong.

Were the divorce attorneys correct? Or does anyone recommend getting a QDRO, anyway, to clarify that my relative maintains this future 50% interest, despite the divorce.

Perhaps it also depends on whether the divorce judgement so specifies. I also need to look at that.

Thank you for your insights.

[GBurns]

As far as I know, once the settlement option is selected and in force the beneficiary (the now ex spouse) is vested. It is now hers. As such it is not part of the divorce settlement unless they put it in for division. If it is not being reassigned as part of the settlement then it stays as it is, namely hers is hers and a QDRO would not serve any purpose.

Think of what the QDRO would say or change if 1 had been issued.

[QDROphile]

Most plans will not change the form of benefit or the beneficiaries once payment starts, no matter what. If the only concern is the survivor annuity, it should be OK without special action such as a QDRO. But it depends on the plan terms.

It is remotely possible that a subsequent spouse and a subsequent QDRO could invade the survivior annuity, but that would require a surprising and probably incorrect ruling from a state court and a surprising and probably incorrect ruling from a federal court to sustain such a travesty.

[david rigby]

Agree.

But watch out for lax administration. For example, suppose the retiree remarries and then dies 10 years later. To those administering the plan, the (new) widow is "the spouse", and they may not realize the first wife is the one (and only) surviving spouse for the J&S benefit.

[ERISAatty]

Thanks to you all for your helpful responses.

[Effen]

The divorce was relatively friendly, and both ex-spouses (both still living) agree that my relative should receive the future 50% interest.

If "future" means after he is dead, then I agree, no QDRO is necessary. I don't even think a subsequent spouse would impact this, since she was the spouse at the time the annuity commenced. That said, PAX is correct and errors do happen.

If "future" means his next monthly payment, then I think she needs a QDRO. Without a QDRO, he will continue to receive 100% of the annuity until he dies, then she will get 50% of whatever he was getting. If she dies first, she never sees a penny of his pension.

If she wants 50% of his pension check, she will need a QDRO. The Plan will not allow the QDRO to change the form of payment, but it should allow the current payment to be split. This does not add any liability to the Plan.

[ERISAatty]

Thanks, Effen,

Yes, by "future," I'm referring to after the death of the ex-spouse. In this case, he's quite a few years older than she is, so his predeceasing her is fairly likely.

Thanks again to all.

[Effen]

That's fine, but she is "entitled" to some portion of his current check. She can agree not to claim it or trade it for the car if she wants. That said, he is "entitled" to some portion of her assets as well.

P.S. "friendly divorce" is an oxymoron

[SoCalActuary]

Friendly divorce, hmm.. Robert Blake, Scott...?

I don't say it will happen, but written agreements keep friendly divorces friendly.

[FundeK]

P.S. "friendly divorce" is an oxymoron

Friendly divorce, hmm.. Robert Blake, Scott...?

I don't say it will happen, but written agreements keep friendly divorces friendly.

What happened to the optimist in both of you?!

I am sure that there are PLENTY of people out there who go through friendly divorces.....when she gets what she wants!!!

[mbozek]

Silly Q- did the divorce decree or property settlement make any mention of pension or LI benefits payable to the AP? If the divorce decree or Prop. settlement does not make any reference to spousal rights to the pension I dont think you can go back to ct for a QDRO if the divorce is final.

[Kirk Maldonado]

mbozek:

Is it a fair extrapolation of your comment to say that you think a court would reject a request for a QDRO even if both parties admitted that they had overlooked the issue of the retirement benefits?

(I'm inclined to agree with you. I could see a court saying that the person's only recourse would be a malpractice suit against the domestic relations attorney. But I've not researched this issue or even spent any time thinking it through.)

[mbozek]

KIrk: I am not a divorce lawyer but I thought that the issue of a final divorce decree and property settlement was a judgment which closed the divorce proceedings except for matters which the court retained jurisdiction, e.g., change in child support or custody. After the divorce is issued a party cant go back to the court and ask for a change because of some matter ( pension benefits ) that was overlooked in the course of the divorce proceedings. If both parties were willing to spend the money they could petition for a rehearing. But it depends on the laws of each state as to whether the divorce can be reopened. An alternate course of action would be for the parties to sign an agreement stipulating to the terms of the pension benefits and give it to the PA.

[david rigby]

An alternate course of action would be for the parties to sign an agreement stipulating to the terms of the pension benefits and give it to the PA.

What is meant by this?

[mbozek]

Some plans will accept letters agreed to by both spouses that clarify unclear provisions or ambigious language in QDROs to avoid the need to revise the QDRO.