How Do You Divide Retirement and Profit Sharing After Divorce?

Texas Post-Decree Qualified Domestic Relations Orders

Qualified Domestic Relations Order (QDRO) is a term used for an order that divides some, but not all, retirement, profit sharing, and other such qualified plans after a divorce. Some of these types of orders are called Domestic Relations Orders (DRO). The drafting of a QDRO or DRO is very technically difficult and should only be done by a lawyer who is an expert in the area.

When is a QDRO written?

A QDRO or DRO ideally should be drafted and signed when the divorce decree is signed. A lawyer must first determine if the retirement plan being divided at divorce is a defined benefit plan, a defined contribution plan, or a combination of the two. He or she should get the plan administrator to pre-approve the order before the judge signs it. The QDRO or DRO must divide the retirement plan as per the Decree of Divorce.

If a QDRO or DRO was not signed at the time the divorce decree was signed, the court that rendered the divorce decree (or another final order dividing property,) retains exclusive jurisdiction to render an enforceable QDRO, DRO, or similar order. This order may divide a pension plan, retirement plan, or other employee benefit previously divided at divorce, whether the plan is private, state, or federal.

If the retirement plan administrator determines that the DRO dividing retirement does not satisfy the legal requirements, the court of continuing exclusive jurisdiction can render a corrected order that satisfies the plan administrator.

A court that renders an order to divide retirement benefits can still amend the order to correct it or clarify the terms, but the plan administrator must approve the amended or corrected order. This can happen if the QDRO or DRO divides the retirement plan differently from the way the divorce decree divided the retirement plan.

Other Payments

The court shall liberally construe this subchapter (TFC Section 9) to effect payment of retirement benefits that were divided in a previous decree that failed to contain a QDRO, or contained an order that failed to meet the requirements of a QDRO or similar order (or differed from the division of the retirement plan in the decree).

In a proceeding under this subchapter, the court may award reasonable attorney’s fees incurred by a party to a divorce or annulment against the other party. The court may order the attorney’s fees to be paid directly to the attorney, who then may enforce the order for fees by any means available for the enforcement of a judgment for debt.

For more information on this subject, please contact The Law Office of Tim Whitten here, or by phone at (512) 790-5066.