A domestic relations order is any order relating to child support, alimony or martial property rights that is issued in accordance with a state or territory’s domestic relations law. In the context of a divorce settlement, a qualified domestic relations order (QDRO) divides or changes the ownership of an employee’s retirement plan, giving each former spouse their portion of the pension plan or asset. QDROs may only apply to employee pension or benefit plans that are subject to the U.S. Employee Retirement Income Security Act (ERISA).
To distribute pension funds to another person (most often an ex-spouse), a QDRO may give ownership in the participant’s pension plan to an alternate payee, who is then able to collect all or a portion of the benefits. While alternate payees are usually former spouses, an alternate payee may also be the participant’s current spouse, child or other dependent. Once an alternate payee has been established, a QDRO can make it possible to divide community or marital property between the plan participant and the alternate payee, or to pay child support or alimony to the alternate payee.
To be considered a QDRO, the order must contain several important pieces of information. These include the name and address of both the retirement plan participant and any alternate payees, the percentage or dollar amount of the award to be distributed to the alternate payee, the name of the participant’s pension plan and the time period or number of payments the order will cover.
Conversely, a QDRO is not allowed to contain certain provisions. For example, the order cannot call for a pension plan to distribute benefits to an alternate payee if the benefits have been promised to a different payee under a previous QDRO, and the order cannot require a plan to provide for a future increase in benefits.
QDROs may be issued as independent orders, or they can be included in a court-approved property settlement or divorce decree. The timing of a QDRO’s issuance should not affect its validity, as long as it meets all other requirements under ERISA. A QDRO could also cover more than one retirement plan under the same or different employers, provided each plan and its benefit assignments are clearly explained within the order.
Qualified domestic relations orders can be very complicated, so it’s best to work with an experienced family law attorney in the U.S. Virgin Islands to make sure you have all of your legal requirements covered.
BoltNagi is a well-respected and established business law firm with family law services serving clients throughout the U.S. Virgin Islands.