Divorcing couples stand to lose money and control over retirement assets – often the biggest marital asset to be divided in a divorce. Loss of money and control happens because QDROs and other retirement and pension division orders are greatly misunderstood by divorce attorneys. Even some self-proclaimed QDRO experts do a poor job with them, because they don’t have enough knowledge of retirement plan laws and how retirement plans really operate. Here is what you need to know to keep control of your money, and of your assets to be divided with your former spouse.
The husband, the wife, one of the divorce attorneys or a QDRO expert?
You or your ex? It doesn’t matter if it is YOUR or your EX’s retirement that is getting divided in the divorce. YOU should always try to be in charge of getting the QDRO done. The party who assumes the responsibility of “getting the QDRO done” has a stronger position because he or she is able to have control over who prepares the QDRO or retirement division order.
Your divorce lawyer or somebody else? Do not let your divorce lawyer handle the QDRO himself or herself, unless you are 100% comfortable with the knowledge your divorce lawyer has about retirement plans and the laws that regulate them. QDROs are more retirement plan law than family or divorce law. This is why many divorce attorneys are wise to outsource the QDROs to a QDRO attorney (not just any QDRO expert). Believe me, most lawyers don’t want the liability of making a mistake with a QDRO that will cost YOU thousands and thousands of dollars). Very few divorce attorneys are sufficiently knowledgeable on retirement plan law to be able to do just as good of a job as for example a QDRO attorney would do. However, often times, divorce lawyers would also fail to recognize who is a good (or bad) QDRO expert. Don’t be forced to use a QDRO professional just because your divorce lawyer refers you to them. Do your own assessment. You can’t afford not to.
Who is a good QDRO expert?
There are many individuals out there who claim to be QDRO experts (QDRO consultants, QDRO professionals, etc). However, upon closer look, you can easily figure out that they don’t know much more than your divorce lawyer or even you can know about QDROs.
THE RED FLAGS:
• EDUCATION. Some “QDRO experts” lack academic credentials (not lawyers, or accountants or actuaries). They did not finish college or their only legal experience is having been a member of a law firm staff, but never a lawyer.
• EXPERIENCE with PLANS. Don’t be fooled by some “QDRO experts” who can only claim experience with preparing hundreds or even thousands of QDROS but they are not familiar with the actual day-to-day operation of a retirement plan.
o Ask about their understanding of retirement plans practical operation and tax laws. It’s suspicious if they cannot claim having gained experience working on retirement plan matters other than QDROs.
o Be wary if they don’t have much to say and only repeat that they have done X number of QDROs.
• MODEL QDROs. Often times those “QDRO experts” use Model QDROs provided by the plans, instead of writing the QDROs from scratch.
• CONFLICT of INTERESTS. QDROs are NOT neutral documents. Each party needs their own QDRO attorney to either prepare the QDRO or review the QDRO prepared by the former spouse’s attorney. Both parties need an individual QDRO attorney who will look after his/her interests. Be wary of anybody offering to prepare a QDRO for you and your former spouse, “representing you both” simultaneously.
THE GREEN LIGHT:
• In order to do the best job preparing QDROs an individual must have vast experience working with retirement plans. Deep and sophisticated understanding of retirement plan laws, regulations, principles and practical operation is crucial to prepare a good QDRO.
• Only an attorney who has practiced long enough in the area of retirement plan laws will be highly qualified to do a good job with your divorce case QDRO.
• It is not necessary to have a locally based QDRO attorney because federal law regulates most of the retirement plans to which a QDRO applies. A QDRO attorney can write QDROs for anybody, anywhere in the country.