QDRO in Florida
What is a QDRO?
Many clients have retirement assets such as a 401k, IRA and Roth IRA accounts, annuities, and other such accounts that require division between the parties. This is accomplished through a QDRO (Qualified Domestic Relations Order). A QDRO in Florida directs the administrator of the pension plan to give a portion of an employee’s pension to the plan participant’s ex-spouse.
This is a document typically prepared after the divorce is final but it is a good idea, in our opinion, to prepare it simultaneously with the divorce documents and submit them all to the court at the same time. It is also a good idea to submit a proposed QDRO to the plan administrator before filing it with the court to ensure it will be accepted.
Who Needs a QDRO in Florida?
If you or your spouse have a retirement plan, you should seek legal advice from a Florida QDRO attorney who can prepare a QDRO in Florida that reflects the terms of your agreement, meets all plan requirements and contains terms most favorable to your interests.
Why Do You Need a QDRO in Florida?
Even though you have reached an agreement and have included that agreement in your marital settlement agreement which has resulted in a court order, the plan administrator or company where your assets are being held can reject your agreement and refuse to pay out the assets as per your wishes. This is because these companies set their own rules as to what requirements must be met to satisfy their needs.
This typically comes in the form of specific language that must be included in the documents. Only a QDRO containing that language will serve the purpose. When a QDRO is not in place, the retirement plan may pay the entire retirement proceeds to your spouse leaving you limited options to recover your share of the retirement proceeds.
When is a QDRO in Florida Drafted?
The first step to ensuring that a QDRO accurately carries out the agreement reached by the parties in a divorce settlement begins with the drafting of the actual settlement. Parties to a divorce should seek legal advice or work with a Florida divorce attorney who can analyze the nature of the pension plan to be divided. Every pension plan is different, and there are many questions which need to be answered before an agreement can be reached regarding the division of retirement benefits.
It is important to note that the entire value of a particular retirement plan or pension is not necessarily considered marital property and subject to division. Instead, only that amount of the plan that was earned or built up during the course of the marriage is subject to division. Courts use various methods to come up with the amount of a retirement plan or pension that was earned during the course of the marriage and that is subject to division.
How to Divide the Property
Factors used by the courts in determining how to divide the marital property – including retirement benefits and pension plans – include:
- Length of the marriage;
- The overall economic circumstances of each spouse;
- Each spouse’s contributions to the marriage, including contributing to the improvement of marital or non-marital assets; and
- Each spouse’s debts and liabilities.
You Might Not Need a QDRO in Florida!
If you and your soon-to-be-ex both have retirement accounts with approximately the same value, it may be easier for you to just walk away with your own account and skip the QDRO process. You should make sure to consult your accountant to determine the tax implications surrounding a division of this asset to determine what is in your best interest.
For example, if you have $10,000.00 in a bank account and your spouse has $10,000.00 in a retirement account it sounds like a pretty even split. But early withdrawal penalties and taxes would significantly whittle down your retirement account balance if you liquidate it today, while a checking, savings or other cash account is worth its face value immediately. This example results in an unequal division.
For more information about how the Florida Courts have decided QDRO cases, the “Florida Bar Journal” has put out an excellent article written by Matthew L. Lundy that is worth the read.