How can I get part of my deceased ex-spouse's retirement funds?
Full Question:
Answer:
Without a QDRO (qualified domestic relations order), the plan may not be aware of a divorce or a former spouse's right to any of the plan benefits. The plan might pay all benefits to the individual actually participating in the Plan, not the former spouse, even if there is already a marital settlement agreement (called an MSA) or judgment of dissolution, because they generally do not meet the requirements of a QDRO. If the individual participating in the plan dies after the divorce but without a QDRO, it is possible that the former spouse will receive no money from the plan. The QDRO can also prevent later lawsuits or proceedings to try and get the benefits split.
As you may already know, retirement and/or deferred compensation plans paid into by one spouse, either directly or by the employer, or a combination of both, are subject to property division in a divorce under California law.
Most retirement and deferred compensation funds are divided using what is called a QDRO or a Qualified Domestic Relations Order issued by a Family Court (sometimes incorrectly referred to as a QUADRO). QDRO’s, mandated under the ERISA body of law, are not used if the retirement plan is a public plan (usually state, federal or military – but these can also be divided by using a similar but differing legal process).
Typically a divorce decree will not be recognized by retirement fund administrators as a valid QDRO even if division of the fund is specified by the decree unless all of the information required in a QDRO is contained in the divorce decree. While a QDRO does assign rights to a portion of retirement benefits to a spouse or former spouse, a QDRO may not enable that individual to immediately access the funds. First, it depends on the type of plan, whether it is a pension (defined benefit) or a deferred compensation (defined contribution) such as a 401k, 457, 403b, etc. In order to receive the start of a pension the retirement fund member must retire, be eligible to retire, withdraw the funds, or die before the spouse will receive his or her portion.
In a divorce settlement it is recommended that a qualified attorney draft or review a QDRO. You would want an attorney who is thoroughly familiar with all the legal implications and who has experience in finding errors in language that might limit a spouse’s rights. A QDRO may be drafted in an “aggressive” fashion that conceals important limitations on benefit options, or limits a spouse’s share of funds.
The QDRO should be filed with the court at the same time as, or even before, the “Dissolution Order” (terminating the marriage). The provisions for dividing retirement plans need to be clearly written and in detail as part of the Settlement Agreement.
Under some plans (federal) if certain provisions are left out of this order, even though they are properly detailed in the DRO (such orders for public plans are normally referred to simply as “domestic relations orders”),they are potentially lost forever. One of these items is the survivor benefit plan for the non-employee spouse. This is important because it is difficult and costly to re-visit a Settlement Agreement after it is filed with the court and may even require a “change of circumstances” to get the original order modified.
Before you begin a court proceeding, you may wish to contact the plan administrator for specific information.