The Qualified Domestic Relations Order (QDRO) is a legal document that outlines how retirement benefits will be divided between parties during a divorce or separation. Specifically designed for defined contribution plans like the Florida Retirement System Investment Plan, this form ensures that the rights of both the member and the alternate payee are protected. Understanding the QDRO process is essential for anyone navigating the complexities of asset division in family law.
The Qualified Domestic Relations Order (QDRO) form plays a crucial role in the division of retirement benefits during divorce proceedings. It is specifically designed for defined contribution plans, such as the Florida Retirement System Investment Plan. This document provides model language and detailed instructions to ensure compliance with legal requirements. The QDRO form includes sections that require essential information about both the member and the alternate payee, including names, addresses, Social Security numbers, and dates of birth. It also addresses marital history, specifying the dates of marriage and divorce, which are vital for determining the marital fraction of benefits. The form allows for different methods of assigning benefits, such as a straight percentage, a specific dollar amount, or a marital fraction, and it outlines the intended form of payment and when benefits will commence. Additionally, it covers important procedures in the event of death, limitations, taxation implications, and the necessity of certification for accuracy. Understanding the QDRO form is essential for ensuring that all parties receive their rightful benefits as part of the divorce settlement.
What is a QDRO?
A Qualified Domestic Relations Order (QDRO) is a legal order that divides retirement benefits between divorcing spouses. It is specifically designed to ensure that the benefits are transferred according to the terms agreed upon in a divorce settlement. A QDRO must be approved by the court and the retirement plan administrator to be effective.
What information is needed to complete the QDRO form?
You will need to provide details about both the member and the alternate payee. This includes full names, addresses, Social Security numbers, and dates of birth. Additionally, you must include the dates of marriage and divorce, and specify how the benefits will be divided.
How do I choose the method for dividing benefits?
The QDRO form allows you to select from three methods for dividing the benefits: a straight percentage, a dollar amount, or a marital fraction. You must choose one method only, as combining them is not permitted. Each method has specific requirements for how the division is calculated.
What is the valuation date?
The valuation date is the date on which the member's vested account balance will be calculated. This date is important as it determines the amount that will be assigned to the alternate payee. You must specify this date in the QDRO form.
When will payments to the alternate payee begin?
Payments to the alternate payee typically begin as soon as administratively possible after the QDRO has been qualified. The timing can vary based on the retirement plan's processing times and requirements.
What happens if the member or alternate payee dies?
The QDRO includes specific procedures for how benefits will be handled in the event of the death of either party. These procedures ensure that the benefits are distributed according to the terms set forth in the QDRO, even after death.
Are there tax implications for receiving benefits through a QDRO?
Yes, any payments made to the alternate payee, who is a spouse or former spouse, will be subject to federal, state, and local taxes. It’s important to consult with a tax professional to understand the specific tax obligations associated with these payments.
Can the QDRO be modified after it is finalized?
Yes, a QDRO can be modified, but it typically requires a new court order. If circumstances change, both parties may need to return to court to amend the existing QDRO to reflect those changes.
What is meant by “retention of jurisdiction” in the QDRO?
Retention of jurisdiction means that the court retains the authority to make decisions regarding the QDRO and any related issues. This ensures that if there are disputes or if the order is initially deemed not qualified, the court can address those matters directly.
What should I do if my QDRO is not approved?
If your QDRO is not approved, the Plan Administrator will typically provide reasons for the denial. You may need to make corrections or provide additional information. It’s advisable to work closely with legal counsel to ensure that any issues are resolved promptly.
Filling out and using the Qualified Domestic Relations Order (QDRO) form is an important process for dividing retirement benefits. Here are key takeaways to keep in mind:
Understanding the Qualified Domestic Relations Order (QDRO) can be challenging, and misconceptions can lead to confusion. Here are four common misconceptions about the QDRO form, along with clarifications to help you navigate this important document.
By addressing these misconceptions, you can better prepare for the process of dividing retirement benefits through a QDRO. Always consider seeking professional advice to ensure that your rights and interests are fully protected.
The FRS Investment Plan
Qualified
Domestic Relations
Order
Defined Contribution
Plan Instructions and
Model Language
Instructions for Using the Model Language Provided
General Information
This document contains model language for a defined contribution plan Qualified Domestic Relations Order (QDRO). Pages 1 through 3 contain explanations and instructions that apply to the model QDRO language on pages 4 through 8. The explanations contain answers to most questions you may have about the model language. If you follow the instructions carefully, your domestic relations order should meet all qualifications for approval. Be sure to fill in every line wherever information is requested.
If you would like more information on the qualification process, see the Procedures document.
Since there are a number of different ways to design a QDRO and provide for division of benefits, the Plan makes no representation as to which method is best for the parties involved.
Note: Only court-certified orders can be qualified.
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Instructions
1. Plan
In this section, you are asked to specify the defined contribution plan under which the member’s benefits are being assigned. The plan name is Florida Retirement System Investment Plan (or FRS Investment Plan).
2. Member
In this section, you are asked to identify the member whose benefits are being assigned. Fill in the following information about the member:
•Complete name
•Current mailing address (including ZIP Code)
•Social Security number
•Date of birth
3. Alternate Payee
In this section, you are asked to identify the alternate payee to whom the benefits are being assigned. Please fill in the following information about the alternate payee:
•Complete Name
•Current Mailing Address (including ZIP Code)
•Social Security Number
•Date of Birth
•Relationship to member
Note: It is acceptable to provide the addresses, Social Security numbers, and/or dates of birth on an attached document which is cross-referenced in the domestic relations order.
4. Marital History
In this section, you are asked for the dates when the participant and the alternate payee were married and divorced. Fill in the dates of marriage and divorce. If you are assigning a marital fraction, these dates will be used to determine the marital fraction
5. Definitions
The model language includes some defined terms with which you may not be familiar. These terms will be used throughout the order.
6. Benefit Payable to the Alternate Payee
In this section, you are asked to choose one of two options for specifying the dollar amount or percentage of the vested account balance to be paid, when it will be calculated, and whether any outstanding member loans and earnings/losses are to be included in the alternate payee’s benefit. Each option uses a different method: Option A uses a straight percentage method, Option B uses a dollar amount method, and Option C uses a marital fraction.
Your order cannot use a combination of these methods. Select one method only.
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14470DCL11_09 10 75432
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Option A. Straight Percentage
Please provide the following information:
•The percentage of the member’s Vested Account Balance that is to be assigned to the alternate payee
•The date the Vested Account Balance is to be calculated (known as the valuation date)
•Whether the alternate payee’s benefit will (or will not) be adjusted for earnings or losses during the period between the valuation date and the liquidation date
Option B. Dollar Amount
Please provide the dollar amount of the member’s Vested Account Balance that is to be assigned to the alternate payee.
Option C. Marital Interest
(This option can be used only if the member has previously transferred a benefit in the FRS Pension Plan (Defined Benefit Plan) to the FRS Investment Plan.
Please provide the percentage of the marital interest in the member’s vested accrued benefit that is to be assigned to the alternate payee. The member’s benefit in the Investment Plan will be valued as the date of the benefit transferred into the Investment Plan.
Note: The marital property fraction will be based on the dates provided in Section 5 of this order and on the participant’s employment history.
7. Form of Payment
This section describes the intended form of payment to the alternate payee. Plan benefits are usually paid immediately in a lump-sum cash distribution. This amount reflects any earnings and losses from the liquidation date to the date of distribution to the alternate payee.
8. Commencement
This section states when payment of benefits to the alternate payee will begin. Typically, the Plan permits payment to begin as soon as administratively possible following the determination that the order has been qualified.
9. Death Procedures
This section specifies procedures for payments of benefits under the QDRO in the event of death of either the member or the alternate payee.
10. Retention of Jurisdiction
This section outlines what is required of both parties if the Plan Administrator initially determines that the order is not qualified. It also states that the court (named earlier) expressly reserves jurisdiction over the dissolution proceeding involving the member, the alternate payee, and the member’s interest in the Plan.
11. Limitations
This section provides specific legal limits on the order.
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12. Taxation
This section explains that any payments made to the alternate payee, who is a spouse or former spouse, will be subject to the appropriate federal, state, and local taxes.
13. Constructive Receipt
This section outlines what the member and the alternate payee are required to do if either receives benefits from the Plan that should have been paid to the other party.
14. Certification of Necessary Information
This section explains that the court may require the member and the alternate payee to certify in writing that the information on which this order is based is accurate.
Note: Only original court-certified orders can be qualified.
END INSTRUCTIONS—MODEL LANGUAGE FOLLOWS
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STATE OF _________________ CASE # ___________________
COUNTY OF _______________
IN THE ____________________ COURT OF ________________
IN RE TO THE MARRIAGE OF:
__________________________________________
Petitioner and
Respondent
Qualified Domestic Relations Order (Defined Contribution Plan)
This order creates and recognizes the existence of an alternate payee’s right to receive a portion of the member’s benefits payable under the FRS Investment Plan, which is qualified under Section 401 of the Internal Revenue Code (the “Code”). This order is intended to be a qualified domestic relations order (“QDRO”), as that term is defined in section 206(d) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and section 414(p) of the Internal Revenue Code of 1986, as amended (“Code”). This order is entered pursuant to the authority granted under the applicable domestic relations laws of the State of _________________________________.
This order applies to the FRS Investment Plan (the “Plan”)
Any successor to this plan shall also be subject to the terms of the order.
The name, address, Social Security number, and date of birth of the member are as follows:
Name:
Address:
Social Security Number:
Date of Birth:
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The person named as alternate payee meets the requirements of the definition of alternate payee as set forth in Section 4 of this order. The alternate payee’s name, address, Social Security number, date of birth, and relationship to the member are as follows:
Relationship to Member:
The alternate payee shall be responsible for notifying the Plan Administrator in writing of any changes in his or her mailing address subsequent to the submission of this order.
Date of Marriage:
Date of Divorce:
Alternate Payee—The alternate payee is any spouse, former spouse, child, or other dependent of a member who is recognized by a domestic relations order as having a right to receive all or a portion of the benefits payable under the Plan with respect to the member.
Liquidation Date—The liquidation date is the date the amount assigned to the alternate payee is transferred from the member’s Vested Account Balance to a separate account established for the alternate payee in accordance with the terms of the QDRO. An assignment as of the liquidation date assigns a portion of the member’s current Vested Account Balance.
Marital Interest—The marital interest is the member’s account balance benefit as of the Transfer Date multiplied by the following fraction:
Number of Marital Years (from the Date of Marriage to the Date of Divorce) while accruing benefits under the Plan
Years of Service during which the
member has accrued a benefit under the Plan up to the Transfer Date (the date the member’s benefit transferred into the Investment Plan)
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Plan Administrator—The Florida State Board of Administration (“SBA”) is the Plan Sponsor. SBA has contracted with Hewitt Associates LLC to process domestic relations orders in accordance with the FRS Investment Plan’s QDRO requirements. Hewitt’s Qualified Order Team will conduct the qualification process.
Transfer Date— The Transfer Date is the date the member transferred a benefit from the FRS Pension Plan (Defined Benefit Plan) into the FRS Investment Plan via an accumulated benefit obligation.
Valuation Date—The Valuation Date is the date on which the member’s Vested Account Balance will be valued in order to determine the alternate payee’s designated portion in accordance with the terms of this order. Accounts are valued on a daily basis.
Vested Account Balance—The member’s Vested Account Balance is the dollar amount the member has a nonforfeitable right to receive from the Plan.
(Choose Option A, Option B, or Option C. You may not choose more than one option)
Option A. Straight Percentage
The order assigns to the alternate payee an amount equal to _______ % of the member’s Vested
Account Balance under the Plan (identified in Section 1) as of ____________________ (insert
applicable Valuation Date).
From the Valuation Date to the liquidation date, the amount assigned to the alternate payee (select one):
Will be adjusted for investment earnings (gains and losses) from the Valuation Date to the date as of which the account is established for the Alternate Payee.
Will not be adjusted for investment earnings (gains and losses) from the Valuation Date to the date as of which the account is established for the Alternate Payee.
Option B. Dollar Amount
This order assigns to the alternate payee an amount equal to $_______ of the member’s Vested
Account Balance under the Plan (identified in Section 1) as of the liquidation date.
Option C. Marital Fraction
This order assigns to the alternate payee an amount equal to _______ % of the “marital interest” (as
defined in Section 4 and 5 above) in the participant’s account balance under the Plan (identified in Section 1) as of the Transfer Date.
The alternate payee is eligible for any available form of payment under the provisions of the FRS Investment Plan.
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The alternate payee shall be eligible to receive payment as soon as administratively reasonable following the determination that this order is a Qualified Domestic Relations Order. In no event can the alternate payee begin his or her benefit later than April 1 following the year in which the member attains age 70-1⁄2.
If the member predeceases the alternate payee prior to payment of the alternate payee’s assigned benefits under the QDRO, the alternate payee’s benefits will not be affected. In the event of the member’s death, the account balance, which remains the property of the member, will be payable to the member’s designated beneficiary or in accordance with Plan provisions. This order does not require the member to name the alternate payee as the beneficiary for the benefits not assigned to the alternate payee.
In case of the death of the alternate payee prior to distribution of the alternate payee’s benefits under the QDRO, the assigned benefits will be paid to the alternate payee’s designated beneficiary or, if none, in accordance with Florida law (Section 121.4501(20).
This matter arises from an action for divorce or legal separation in this court under the case number set forth at the beginning of this order. Accordingly, this court has jurisdiction to issue this order.
In the event the Plan Administrator determines that this order is not a Qualified Domestic Relations Order, both parties shall cooperate with the Plan Administrator in making any changes needed for it to become qualified. This includes signing all necessary documents. For this purpose, this court expressly reserves jurisdiction over the dissolution proceeding involving the member, the alternate payee, and the member’s interest in the Plan. This Order hereby vacates any previously issued QDRO in this case.
Pursuant to Section 414(p)(3) of the Code and except as provided by Section 414(p)(4), this order:
(i)Does not require the Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan;
(ii)Does not require the Plan to provide increased benefits; and
(iii)Does not require the payment of benefits to an alternate payee that is required to be paid to another alternate payee under another order previously determined to be a Qualified Domestic Relations Order.
12.Taxation
For purposes of Sections 402 and 72 of the Code, any alternate payee who is the spouse or former spouse of the member shall be treated as the distributee of any distributions or payments made to the alternate payee under the terms of the order and, as such, will be required to pay the appropriate federal, state, and local income taxes on such distributions.
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If the Plan inadvertently pays to the member any benefit that is assigned to the alternate payee pursuant to the terms of this order, the member will immediately reimburse the Plan to the extent the member has received such benefit payments and shall forthwith pay such amounts so received to the Plan within ten (10) days of receipt.
If the Plan inadvertently pays to the alternate payee any benefit that is actually payable to the member, the alternate payee must make immediate reimbursement. The alternate payee must reimburse the Plan to the extent he or she has received such benefit payments and shall forthwith pay such amount so received to the Plan within ten (10) days of receipt.
14. Effect of Plan Termination
If the Plan is terminated, the alternate payee shall be entitled to receive his or her portion of the member’s benefits as stipulated herein in accordance with the Plan’s termination provisions for members and beneficiaries.
15. Certification of Necessary Information
All payments made pursuant to this order shall be conditioned on the certification by the alternate payee and the member to the Plan Administrator of such information as the Plan Administrator may reasonably require from such parties to make the necessary calculation of the benefit amounts contained herein.
Dated this _________ day of ____________________, ______
By the court:
__________________________________________________
Judge’s Signature
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Incomplete Information: Failing to fill in every required field can lead to delays or rejections. Each section must be completed accurately, including names, addresses, and identification numbers.
Incorrect Plan Specification: Not specifying the correct defined contribution plan can cause confusion. Ensure that you clearly identify the Florida Retirement System Investment Plan.
Missing Dates: Omitting the dates of marriage and divorce can complicate the division of benefits. These dates are crucial for determining the marital fraction.
Choosing Multiple Payment Methods: Selecting more than one method for calculating benefits is a common mistake. Only one option—either a percentage, dollar amount, or marital fraction—should be chosen.
Ignoring Valuation Dates: Failing to specify the valuation date for the vested account balance can lead to disputes. This date is essential for calculating the benefits accurately.
Not Considering Tax Implications: Overlooking the tax consequences of payments can result in unexpected liabilities. Payments to an alternate payee may be subject to federal, state, and local taxes.
Neglecting to Attach Necessary Documents: If you choose to provide sensitive information on an attached document, ensure it is properly referenced. Incomplete cross-referencing can lead to confusion.
Failure to Certify Information: Not certifying the accuracy of the information can cause issues later. The court may require written confirmation that all details are correct.
When filling out the QDRO form, it is essential to follow certain guidelines to ensure accuracy and compliance. Below is a list of actions to consider:
The Qualified Domestic Relations Order (QDRO) form shares similarities with the divorce decree, which is a legal document that finalizes a divorce. A divorce decree outlines the terms of the divorce, including property division, child custody, and support obligations. Just as a QDRO specifies how retirement benefits are to be divided between spouses, a divorce decree addresses the distribution of all marital assets. Both documents require clear identification of the parties involved and the specifics of what is being divided, ensuring that both spouses understand their rights and responsibilities following the divorce.
Another document akin to the QDRO is the separation agreement. This agreement is typically created when couples decide to live apart before finalizing their divorce. It details the terms of their separation, including financial arrangements and property division. Similar to a QDRO, a separation agreement must be clear and comprehensive to prevent future disputes. Both documents serve to formalize the division of assets, providing a framework for how each party will manage their financial obligations during and after the separation process.
The marital settlement agreement is also comparable to the QDRO. This document is often part of the divorce proceedings and outlines how marital property will be divided, including retirement accounts. Like a QDRO, a marital settlement agreement must be approved by the court to become enforceable. Both documents aim to protect the interests of each spouse, ensuring that asset division is handled fairly and legally, thus preventing future conflicts over property rights.
The pension division order is another document similar to the QDRO. This order specifically addresses the division of pension benefits as part of a divorce settlement. It functions much like a QDRO, detailing how the pension benefits will be shared between spouses. Both documents require precise language to ensure compliance with plan rules and to facilitate the correct distribution of benefits. The pension division order must also be court-approved to ensure its validity, similar to the QDRO process.
Understanding various legal documents is essential during financial negotiations, such as the prominent role played by the Promissory Note. This document ensures that both lenders and borrowers have a clear understanding of their financial commitments, thereby reducing the likelihood of misunderstandings and disputes in financial transactions.
The property settlement agreement is also relevant. This document outlines how marital property will be divided upon divorce. While a QDRO focuses specifically on retirement benefits, a property settlement agreement can cover a broader range of assets, including real estate and personal property. Both documents require clarity and specificity to ensure that all parties understand their rights. They also need court approval to be enforceable, emphasizing the legal nature of asset division in divorce proceedings.
A child support order bears some resemblance to the QDRO as well. This order stipulates the financial support one parent must provide to the other for the care of their children. While it does not directly address the division of marital assets, both documents are essential in determining financial obligations following a divorce. They require accurate information about the parties involved and must be enforced by the court to ensure compliance, highlighting the legal framework surrounding family law matters.
Finally, the spousal support order, or alimony agreement, is similar to a QDRO in that it outlines the financial responsibilities one spouse has to another after divorce. This order specifies the amount and duration of support payments, much like a QDRO specifies how retirement benefits will be allocated. Both documents aim to provide financial stability for the parties involved post-divorce and require court approval to ensure they are legally binding.