Houston Qualified Domestic Relation Order Attorneys (QDRO)
For many divorcing spouses, their respective retirement plans may be their most lucrative asset and the source of income that they are depending upon as they move through their lives and into their retirement years. These retirement plans can often be the most contentious aspect of a divorce and a prominent source of confusion among the parties.
Due to federal regulations and a law called ERISA, retirement benefit plans are subject to complicated federal regulations which dictate how they must be treated in a divorce in order for any division to be valid and binding. In short, divorcing spouses must obtain a “Qualified Domestic Relation Order,” or QDRO, to comply with the requirements of ERISA and the tax code. At Lindamood & Robinson, our Houston QDRO Attorneys have many years of experience in working with the division of retirement funds in divorce and obtaining valid QDROs.
How are Retirement Plans Treated in a Texas Divorce?
Texas is a community property state. This means that any property earned as income by the parties during the divorce will be considered community property and subject to an equal division in a divorce. This principle applies to income that is placed in a retirement plan as a contribution and therefore not received in a paycheck. Thus, a spouse is generally entitled to one-half of all the benefits of the other spouse’s retirement plan that are attributable to the contributions made during the time the parties were married.
To give an example, if a wife made contributions to a retirement plan for 20 years, and she was married to her husband for only the last 12 years of those 20 years, then he would be entitled to one-half of the retirement benefits that are attributable to contributions made in those 12 years. Keep in mind that when judges make divisions of property or approve settlements, they are looking at the entire marital estate, so it is not necessary that every asset be divided exactly by one-half.
For further information on how retirement benefits and related assets are distributed in a divorce, please see our resources on Investment and Retirement Accounts, Divorce, and Property.
What is a QDRO and How is it Obtained?
A QDRO is a court order obtained in a divorce that will be provided to the administrator of an employer retirement plan. The QDRO will instruct the administrator of the plan to recognize the right of an “alternate payee” (the divorcing spouse of the employee) to receive a portion or all of the benefits of the retirement plan as they are paid out. Divorcing parties cannot create a QDRO by their own agreement and provide it to the retirement plan administrator; only a court can create a QDRO, although the divorcing parties can reach an agreement regarding how they’d like the benefits of the retirement plan split up which they can submit to the court for approval.
A QDRO must contain the following information to be considered valid:
- The name and last known mailing address of the participant and each alternate payee;
- The name of each plan to which the order applies;
- The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee, and
- The number of payments or time period to which the order applies.
A QDRO can be obtained from a court during a divorce process, although there is no requirement that it only be obtained during a divorce. A QDRO is generally used to name a spouse as an alternative payee, but can also be used to name a child or other dependent.
The experienced family law lawyers at Lindamood & Robinson will guide you through the process of understanding whether you and your spouse’s assets, including retirement benefits, are subject to community property division; we will work with you to negotiate and/or litigate a proper division of the benefits and obtain a QDRO that serves your needs and honors your rights.
Contact Experienced Houston QDRO Attorneys for Assistance in Houston, Galveston & Harris County
For questions on QDROs or other matters pertaining to divorce, contact our Houston QDROs lawyers by calling 713-489-2551 for our Houston office or 281-942-6475 for our office in League City (by appointment only).