Ex wife isn’t pushing for qdro

[Eddiecaps]

I’m divorced for 7 years and all property and assets were split but not retirement and pension (QDRO). When we split we used her lawyer who was mediator trained and it greatly reduced the cost. I hired a lawyer to look over what I was signing as I needed someone with a fiduciary relationship towards me. Divorce went fine, I had my attorney draft QDRO through my company trustee for 401k and pension (and I paid to do that) but my ex and her lawyer for some reason never signed it(didn’t understand or didn’t want to deal with it). My lawyer a few years go said don’t press the issue as if he never signs it then it will not be agreed and not split (she passes away - I do not wish that as we have children).  

Pension if I work for 30 years she could be entitled to portion the 10 years while married (1/6 of pension)

401k when I had 600k her portion was 200k (from my recollection). Since I have been maxing it out and it’s grown is worth 1.2M. Don’t know how much her portion of growth would be but I imagine it would be 400k. Clearly that will need to be recalculated by working through the pension/401k trustee.

Question: should I bring this up and settle (ex will likely think I’m doing that for nefarious reasons - just always thinks I’m up to the worst despite trying to give her what’s fair) or should I listen to my lawyer? 

Benefits to do in my mind are to get it behind me and have clear understanding of what’s in my 401k. Downside is dealing with her on this and purely losing financial benefit. Clearly there is a legal recommendation and a ethical consideration (I always try to do right thing but it will come with drama and argument)

I appreciate anyone who has had experience on this topic.

[Larry Starr]

Easy answer; consult with your competent (in this area) lawyer.  No other answer is appropriate (IMHO).

[QDROphile]

You might consult your therapist and spiritual advisers concerning doing the right thing and achieving peace of mind.  Sometimes the options presented by lawyers do not come with recommendations weighted according to non-legal values.  In other words, a course of action that is likely to give you an economic outcome that is better than you expected based on the original conceptual property division may not be the best for you in non-tangible aspects of your life.  I agree with Larry Starr about the legal questions.

[fmsinc]

The problem is that even though the QDRO's have not yet been entered for the pension and the 401(k) Plans, the law in many states holds that she actually is the beneficial owner of the interest awarded to her in these benefit plans, and that you hold them as constructive trustee for her benefit and have a fiduciary duty toward her.  This also leads to the conclusion that she is entitled to the gains, losses and investment experience with respect to her original share of the 401(k) Plan.  See the attached Memo that deals with both of these issues.  Proving the increase in the value of the 401(k) is another issue.  See 2 additional  Memos attached.   Note that these Memo's were prepared from the perspective of Maryland law and may or may not apply in your state.     

In Maryland a QDRO is viewed as an enforcement tool, like an attachment or garnishment that can be entered at any time, even many years after the entry of the Judgment of Divorce.  Other states may view QDROs in a different light and impose a limitation that precludes their entry after a certain period of time (statute of limitations).  Some jurisdictions may hold that the court loses jurisdiction to address the entry of a QDRO. 

Another problem is that when you retire, the Plan Administrator may ask you to fill out a form that asks (with respect to your pension) whether or not you have been divorced and whether or not there is a court order awarding retirement or survivor annuity benefits to a former spouse.  In most jurisdictions, if you had a written Agreement with respect to the pension allocation, and if that Agreement is incorporated into the Judgment of Divorce, then the Agreement is deemed to be an Order of the Court and enforceable as such.  If the Plan has knowledge of this it will become very nervous about paying out retirement benefits to you that may belong to your ex-wife and may refuse to pay any payments to you until the matter is resolved.  Note that Plans are not required to do this, but they don't want to get drawn into court battles and find it easier to put pressure on you.      

Yet another issue is what will happen is you remarry and then retire and name your current spouse to receive your retirement annuity benefits.  Under those circumstances (and if we are talking about an ERISA qualified plan), your new spouse becomes vested in your survivor annuity benefits and your former spouse will not receive them regardless of any subsequently issued QDRO. See, e.g.,  these cases: 

in  Hopkins v. AT&T Global Information Solutions at
http://scholar.google.com/scholar_case?case=9954117838131396049&q=hopkins+at%26T+global&hl=en&as_sdt=2,9

followed by the 5th Circuit in 1999  Rivers v. Central and South West Corporation at   http://scholar.google.com/scholar_case?case=2296953953561556363&q=rivers+central+and+south+west&hl=en&as_sdt=2,9:

        “This Circuit agrees with the Fourth Circuit's decision in Hopkins and adopts its rationale. Rivers failed to protect her rights in Franklin's pension plan by neglecting to obtain a QDRO prior to Franklin's retirement date. Consequently, Franklin's pension benefits irrevocably vested in Mrs. Franklin on the date of his retirement and Rivers is forever barred from acquiring an interest in Franklin's pension plan.”

 To the same effect see Dahl v. Aerospace Employees’ Retirement Plan, a 2015 case from the U.S. District Court for the Eastern District of Virginia (and cases cited therein) - 
https://scholar.google.com/scholar_case?case=3487596170773082469&q=dahl+v.+aerospace&hl=en&lr=lang_en&as_sdt=20000003&as_vis=1

The bottom line is that burying your head in the sand and hope she predeceases may not make all of these issues go away.  Even is YOU die before she does, the Pension Protection Act of 2006 will allow the Court to enter a post-mortem (after death) QDRO, so your estate may have to deal with these issues after your death.     

I have assumed that you are covered by a regular US business plan that is one of the 960,000 or so Plans subject to a Federal Law known as the Employee Retirement Income Security Act of 1974 - ERISA.  If you are a participant in a Federal, state, county or municipal plan then ERISA will not apply but some features will be the same.    

So you need to find a lawyer in your jurisdiction who is conversant with this very esoteric area of law and who can tell you where you stand if you do nothing, and what you have to gain or lose if you proceed to have the QDROs prepared and submitted to the court.   BTW, your ex-wife's lawyer is guilty of flagrant malpractice in failing to follow up on these QDROs, and is likely subject to sanctions by the governing Bar Association for violation of the Rules of Professional Conduct.  See two more attachments discussing the liability of attorneys under these circumstances.  

Good luck.  

Gains, Losses, Ownership Interest and Constructive Trust.pdf 401(k) Tracing Marital Portiion See 3.3.3 & 3.3.4(i).pdf Tracing by DSG Memo.pdf JLG Article - It Ain't Over.pdf Malpractive - Lawyer Liability in QDRO Cases - Willick.pdf