California QDRO Attorney
When your marriage is over, you may need to hire a California QDRO attorney to help you obtain retirement benefits. Under California community property laws, a spouse’s retirement is considered marital property and can be divided upon legal separation or divorce. Former spouses, children, and other dependents may be entitled to a spouse’s 401(k) or related qualified employee retirement plan. The amount to be paid to an Alternate Payee will depend on the state in which the divorce occurred, the assets divided during marriage, and other factors.
California QDRO Legal Services
At San Diego Esquire, we provide affordable QDRO services to California residents and family law attorneys. Our flat fee QDRO services start at $495. Work directly with our California QDRO attorney throughout the entire process. Below is an overview on QDROs. Read on to learn more.
What is a QDRO?
A Qualified Domestic Relations Order, referred to as a QDRO, is a court order that divides a retirement benefit plan in a divorce. A QDRO provides specific instructions to the retirement plan administrator on how to divide a pension. QDROs are created pursuant to state domestic relations laws and federal laws such as the Employee Retirement Income Security Act.
The divorce decree should identify the retirement plan, state the percentage (or dollar amount) of the retirement benefit to be awarded to the Alternate Payee (ex – former spouse, child, or other dependent of a participant), address survivor benefits, and post-retirement subsidies such as a cost of living adjustment. Defined benefit and contribution plans (including 401(k) 403(b), IRAs, and 457) may be divided by a QDRO.
During a divorce process, one of the largest community property assets is a retirement plan. Couples can divide the plan any way they wish, so long as the division is consistent with California law. Many couples divide plans so that one spouse receives a percentage of the payouts once their ex begins collecting retirement.
QDROs are required for employee sponsored plans such as 401(k), 403(b), 457, thrift, profit sharing, money purchase, employee stock ownership, and other business plans. QDROs are not required if one spouse buys the other out.
Once the divorce is final, the spouse who will be the alternate payee should gather the information needed for the QDRO. This includes the name of the plan, the name of the plan administrator, name of the spouse, the spouse’s social security number, the spouse’s address, the date of the marriage, the date of separation, the date of judgment, the percentage or dollar amount of the payments, and the number of payments or time period for which the order applies. The alternate payee will need to contact an attorney who specializes in QDROs to draft the QDRO. Laws governing QDROs are complicated and QDROs need to be tailored to the specific plan and need to be prepared by a specialist.
Once the QDRO is drafted, the primary payee will need to approve it to ensure it is consistent with the divorce settlement.
Next the QDRO will be sent to the plan administrator. The plan administrator will review the QDRO ensure it conforms with federal law and the plan’s own policies. About 50% of the time, the plan administrator will reject the QDRO and request that the alternate payee make minor changes. Once the requested changes have been made, the QDRO can be refiled.
Once the plan administrator accepts the QDRO, all of the parties need to sign it. If the primary payee refuses to sign it, the alternate payee may need to get a court order. The QDRO needs to be sent to a family court judge for approval. After the judge approves the QDRO, the alternate payee will receive a certified copy, which needs to be sent to the plan administrator. Since the plan administrator has already approved the QDRO, it will be quickly accepted.
The QDRO process takes about 3-6 months. There is no deadline for filing a QDRO, but there may be adverse consequences to delaying the filing of one. The alternate payee will not receive payments until the QDRO is accepted, and will not receive retroactive payments, even if he/she would have been entitled to those payments had the QDRO been accepted sooner. If the primary payee dies before the QDRO is accepted, the alternate payee may not receive any benefits, even if they would have gotten benefits if the QDRO had been filed earlier.
Understanding a QDRO
Money withdrawn through a QDRO is not subject to the typical 10% early withdrawal penalty. QDRO income is rollover eligible into other retirement accounts such as a traditional IRA. If you elect to receive the funds directly instead of rolling them over into a retirement account, you will be subject to mandatory withholding. Federal tax withholding is 20%. You may also have to pay state taxes.
California QDRO Service
Sign up online for our QDRO service. Upon submitting an order, you will be emailed an intake questionnaire. You will provide information to us including your contact information, copies of your divorce judgment (including the marital settlement agreement), and your retirement plan information. Our QDRO attorney will follow-up with you if additional information is required.
Once we obtain all the necessary information, we will prepare the draft QDRO. The draft will be sent to both parties for review. If needed, the draft order will also be sent to the retirement plan administrator for pre-approval. When no further revisions are needed, San Diego Esquire will provide you with the final QDRO to file with the court and instructions on how to submit it to the plan administrator.
Contact us if you have any questions about our services.