To avoid taxes and penalties withdrawing funds from a qualified plan to pay a spouse or former spouse, a Qualified Domestic Relations Order (QDRO) must be entered by the court. Even though the division of marital property is governed by state domestic relations law, any assignment of pension interests in a private plan are governed by federal law under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986. Federal law requires that a pension plan pay benefits only to participants and their beneficiaries. Federal law prohibits a pension plan from assigning benefits to third parties except in circumstances specifically authorized by federal law. Federal law does allow payment of pension benefits to the former spouse, child or dependent of a participant in a pension plan if the court has entered a QDRO. The law states specific requirements which must be met before a pension plan can determine an order to be qualified. To make sure the QDRO is prepared correctly so no outstanding issues exist for both the participant or nonparticipant spouse, the parties should retain an experienced attorney who specializes in the division of pension benefits in divorce to ensure the matter is handled correctly.
Louise Nixon has specialized in determining the community or marital interest in pension benefits earned through employment and in consulting and/or drafting appropriate orders for the division and disposition of those interests. While QDRO Counsel Inc., a Professional Law Corporation welcomes visitors to its offices, almost all QDRO services may be provided via phone, fax, email and mail. Louise can be reached at 888-760-7376.