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Incorrect Calculation on Unsigned and not finalized QDRO


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I started a 401K plan in 2000, stopped contribution in 2011 because of job change; was married in 2005.  I just received copy of QDRO and they are asking for 50% and it is not a correct calculation.  What can I file to correct the order?

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You don't need to accept it, but I strongly recommend that you work through your attorney.  

The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

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As Effen says, you need to work through your attorney on this. If the QDRO refers to a plan, and the money is in an IRA, then that needs to be changed at the very least. But there is an implication that the QDRO terms were agreed upon by both parties so this has to go back to your attorney.

Ed Snyder

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This is no substitute for consultation with a domestic relations lawyer. Typically a divorce decree/judgment (which may include a separate property settlement agreement) will provide the basic economic terms of dividing the retirement assets, regardless of the nature of the account that holds the assets (e.g. plan, IRA, annuity contract). A domestic relations order that wants to become a QDRO usually does not address the economic division of retirement assets for the first time. It usually follows what was provided in the decree/judgment and "merely" supplies the technical provisions necessary for qualification by the plan. As noted above, a QDRO, as such, is inappropriate for dealing with an IRA, so another type of supplemental order is required, but it would look back to the terms of the original decree/judgment for the terms of division. If the original decree/judgment did not address the division of the retirement assets, or deferred the determination of how the assets would be divided to the consideration of the supplement judgment (or, mistakenly, a QDRO-to-be) you are going back to the domestic relations court for consideration. One way or another, you are going back to the domestic relations court concerning the division of the retirement benefits, and you should do that with the assistance of a lawyer.

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9 hours ago, QDROphile said:

This is no substitute for consultation with a domestic relations lawyer. 

... and don't assume that 50% division is required.  Other proportions are possible, which might be loosely described as "divorce horse-trading".

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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1 hour ago, david rigby said:

... and don't assume that 50% division is required.  Other proportions are possible, which might be loosely described as "divorce horse-trading".

This is very true.  I have seen examples where one party got the home free and clear (It was the wife.  The kids were still in school and living with her) and the other party got 100% of the retirement plan assets. 

 

So to repeat go talk to a good domestic relationship attorney.  

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What you likely have is a DRO - if this is asking the 401(k) plan to split your account but you have already rolled it over to an IRA then the Plan will not qualify the DRO since they no longer have access to your money. When the DRO is rejected by the plan the attorneys will need to fix it. At that time your attorney and your exes attorney should take more care in drafting the DRO to be sure it correctly splits the account in the manner agreed to during the divorce settlement.

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7 minutes ago, Rich Hudson said:

 ... be sure it correctly splits the account in the manner agreed to during the divorce settlement.

Excellent point.  No-where in the above discussion did anyone state that any type of split was already included in the divorce settlement.  We won't make any assumptions, so your attorney will address this Q.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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If you transferred your 401(k) balance to an IRA you do not have a "Qualified Domestic Relations Order" (QDRO) or a "Domestic Relations Order" (DRO).  Those documents are designed for pension and retirement plans under a number of  Federal laws including ERISA, the REA and the PPO of 2006, all of which would apply to your 401(k)  If the court signs your husbands form of QDRO or DRO and they serve it on your old employer, they will not get anything because you have moved it to an IRA and they will have to find out to what IRA you transferred it and ask the court for another form of Court Order, a "Retirement Benefits Order" (RBO), and it would name the custodian of your IRA.  

I assume you signed a written Agreement whereby your former spouse was to receive a share of your 401(k).  Or, if there was no written Agreement, the Judgment of Absolute Divorce (JAD) entered by the court awarded him a share of your 401(k).  You need to know how much was addressed in the Agreement or awarded in the JAD.  Those documents are the source of your obligation. A QDRO or a DRO or an RBO are simply the enforcement tool to enforce collection of the obligation created by the JAD, or the JAD incorporating your Agreement, as the source of you obligation to make a transfer of you 401(k). 

Under the law of most states he would be entitled to 50% of the "marital share", that is 50% of the amount of the 401(k) account that you accrued during the years of marriage - not what you accrued before marriage and not what you accrued after marriage.  But in most states the Court has the discretion to award whatever they think is equitable.....and equitable is not necessarily equal.    

It is clear from your post that you did not have an attorney representing you in this process.  That is unfortunate since you may have missed critical deadlines.  In most states you have only a limited time to object to an action that the court has taken.  For example is the court actually entered a QDRO, that is, signed it and entered it in the Court records, you could have as little as 20 days to object; and if you fail to object within that timeframe it's too late.  Whether the JAD or the QDRO is right or wrong, it will not be changed.  The legal principle is known as res judicata.  On the other hand, if the JAD contained a provision reserving the Court's ability to issue, correct, amend, etc. a QDRO, they will have the power to fix the problem even after the expiration of any limiting timeframes.  Not all state laws are the same.  What I am telling you applies in Maryland, but I cannot vouch for the other 49 States and DC and US territories.   

So everybody on this Message Board is telling you to get a lawyer who is knowledgeable in these matters and who will be in the best position to get back to the judge and have him/her correct the mistake, if that's what it is. 

Good luck, 

David 

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