I went through a divorce 3 years ago and we are trying to finalize a property settlement.
I have a retirement plan with a big oil company that I want to keep intact. I don’t want to split it up, plus we weren’t married the entire time I have been working and I have about 10 years to go before retirement.
My plan is to buy my ex out by giving her my share of the house and some cash. She is agreeable to this. The problem is that her lawyer says we have to do a qualified domestic relations order (QDRO) while my lawyer says her lawyer doesn’t know what he is talking about. My lawyer says it it not necessary and will cost a ton of money to get done.
What would be the advantage to me to do a QDRO, pay for it, and just get this over with?
It sounds like your lawyer is right. You only need a QDRO if you are splitting an ERISA controlled plan. In short, ERISA is federal law as to certain plans that controls how those plans are treated. If you work for a big oil company it is almost certain that ERISA controls. If a plan is being split, a QDRO is necessary because any settlement in which the employer’s plan administrator did not pre-approve the division and where a QDRO was not entered (an actual judgment of the court), then that agreement between former spouses is not binding on the employer. At retirement the employee spouse would still get all the pension or assets and the other spouse would get nothing. This is a gross over-simplification of a very complicated area.
Now, in your case you are not splitting a plan -you are keeping the plan intact for yourself. A QDRO for what you describe should not be necessary.
As for advantages of a QDRO for you, there are none. It is, as your lawyer said, a waste of time and money. It is a matter of convincing your wife’s lawyer that he is wrong.
Yikes. Having been screwed hugley, bigly, painfully in the QDRO area, may I respectfully suggest that you need to call your plan administrator and find out if they require one saying you can keep the plan and not split it? It won’t cost a thing to ask and it could cost everything if they require it (the company) and it isn’t done. Some of these companies have their own rules…..with it being community property state, maybe err on side of caution.
Keep in mind that not having a QDRO always is a disadvantage for the non-participant spouse (the person not employed be the company).
The reason is simple: the participant spouse (the employee) gets the whole pension or benefit if the QDRO is not done or if it is not done properly.
So, it would be hard to see any benefit for Bluto to pay thousands to get this done.
But the overriding fact is still the same, a QDRO is only necessary where a benefit plan is being divided in some manner. If the participant is getting the entire plan, then a QDRO is not required.
As stated above, it is NOT necessary for you to do anything in relation to your personal retirement/employee investment account to keep it fully for yourself after the divorce.
But Friend, take it from me, a survivor of 3 divorces, that there is no predicting what an ex spouse and her attorney might convince the Court of and win a judgement in her favor….And then the judgement will have to be appealed leading to greater delay and expense.
After 3 divorces, I somehow managed to keep my full military retirement, my full civilian retirement, and my full civilian employee retirement plan investment where in one instance it had to go to appeals court.
I have learned that many times what might have been a civil divorce turned into a long ugly divorce because of the spouses attorney…..