During their marriages, many New Jersey couples discuss and plan for retirement. This often includes participating in retirement plans offered by employers. If the parties divorce, those plans are often divided by the courts or by the parties if they negotiate their own settlement.
In order for the receiving spouse to have access to his or her portion of the account, the court will need to enter a qualified domestic relations order (QDRO), which is required under the Employee Retirement Income Security Act of 1974 (ERISA). This order is what authorizes a plan administrator to disburse benefits to a former spouse (called an alternate payee). These orders must contain specific information in order to be valid under ERISA.
A QDRO must be issued by the court in order to be effective. Including details of the plan, the parties involved and how much will be divided in a privately negotiated property settlement agreement is not enough. However, the necessary details can be put into a property settlement agreement that is then approved by the court. It is not necessary for a QDRO to be a separate order, but it might be beneficial for simplicity’s sake.
Regardless of whether the QDRO is part of a New Jersey divorce decree or settlement or stands alone, it will need to be provided to the plan administrator. Every retirement plan has its own requirements for these orders, so discussing the matter with the plan administrator ahead of time could save everyone involved time and frustration later. Furthermore, most people are not aware of all of the requirements of QDRO’s, so it would be a good idea to also discuss the matter with an attorney who can prepare the order in accordance with the rules outlined by ERISA, the plan administrator and the court.
Source: United States Department of Labor, “QDRO’s — An Overview FAQs“, Accessed on Dec. 11, 2016