Retirement plans that are acquired or appreciate during the marriage are subject to Equitable Distribution in New York State divorce actions. If a portion of a retirement plan is equitably distributed from one spouse to another, the transfer takes place by Qualified Domestic Relations Order (QDRO).
A QDRO is a domestic relations order that creates or recognizes the existence of the right of an “Alternate Payee” to receive all or a portion of the benefits payment to the ‘Participant” under a retirement plan. The QDRO distributes the “Alternate Payee’s” portion. This is a tax-free transfer if the distribution is from on qualified plan to another qualified plan.
There a many formal requirements with a QDRO. It must include the names and last known mailing addresses of the Participant and Alternate Payee; the name of each plan to which the order applies; the dollar amount or percentage (or 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.
There are also many prohibitions regarding what a QDRO must not do including that a QDRO must not require a plan to provide an Alternate Payee or Participant with any form of benefit or option not otherwise provided under the plan. Further a QDRO must not require a plan to pay benefits to an Alternate Payee that are required to be paid to another Alternate Payee under another order previously determined by a QDRO.
The retirement plan administrator must approve a QDRO and that person will also implement the terms.
Equitable Distribution of a retirement plan requires knowledge of the formalities of a QDRO. An experienced matrimonial lawyer is invaluable to navigate the procedures and to protect your financial and legal rights.