Family law attorney Scott Levin and benefits attorney Corey Schechter explain QDROs, the court orders that split 401(k)s and pensions in divorce. A QDRO requires drafting, plan-administrator approval, signatures, court filing, and delivery to the plan. Mistakes can trigger rejections, tax penalties, and delays, so you need an ERISA-knowledgeable attorney.
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Hey everyone, this is Scott Levin, Chief Peacekeeper. I am an attorney mediator in San Diego working throughout California, helping people divorce peacefully and amicably. I'm here with a good friend of mine today, Corey Schechter. I'll let Corey talk in a second, I promise, Corey. But Corey is an employee benefits attorney Who has a big practice and a focus on the world of QDROs, which is how you divide a retirement asset like a pension or 401 during a divorce so that you transfer the 401 funds from the person who earned it to the other spouse without paying penalty and other fees and taxes. So I wanted to bring Corey on today to kind of talk through what the Quadro process is. What does it mean? And to kind of just give us a real big overview of Quadro. Quadro is a QDRO for those that are wondering. And Corey, maybe you could just take us through. So, so someone calls you that's going through a divorce, whether they're working with a mediator or they're represented by counsel, and they say, Hey, we've come to an agreement on how these retirement funds should be distributed from me to my spouse or my spouse to me. What happens next?
Right. Thanks, Scott.
Yeah.
So just to give a bit of a background, a QDRO is an order, like you said, that creates or recognizes the existence of an alternate payee's right to the participant's benefit, who the participant being the person who actually earned the benefit. The alternate payee can be a spouse, a former spouse, or other dependent of that participant. And as As I said, it essentially creates and recognizes the existence of that alternate payee to all or a portion of that participant's benefit. So, you know, once the parties have come to an agreement or, you know, gone through trial and they essentially have either a settlement agreement or some sort of judgment which does in fact assign all or a portion of those benefits from the participant's account to that alternate payee, they would come to me. And what I would do is I would then actually draft the order, which the legal order which needs to be signed by the judge, which divides the benefit between the participant and that alternate payee. So, you know, essentially what I do is I look at the marital settlement agreement, and hopefully it's well drafted. And, or if it's a judgment following a trial, I would look at that, and hopefully that's well drafted and explains in clear language what portion of that retirement account the alternate payee is to receive. So what I do is I essentially look at the marital settlement agreement or judgment, and I prepare the QUADRO really based on the language that's in the marital settlement agreement. Obviously, there's some modification of sorts that's going to be necessarily required in doing so. And there's a lot of information that goes into a QUADRO that's for all intents and purposes, generally left out of a marital settlement agreement or judgment. Um, but, you know, for all intents and purposes, the parties would come to me, and I usually represent them jointly. Uh, so I'll prepare the QUADRO jointly on behalf of both parties. Not all the time, but, uh, more often than not, that's how it goes. Um, so what I do is I prepare the order, uh, I then send it to the parties for their review. If they want their attorneys to take a look at it, that's entirely fine. Um, once I get the Party's approval on the language. I will then send it to the plan administrator who actually administers the payment of the benefits in the plan to get what's called their pre-approval on the draft order that I send to them. Once we get the plan administrator's pre-approval, I'll get the parties to sign it if it's a stipulated order. Sometimes these orders aren't stipulated to for you know some reason. one spouse just won't agree to the language in the order, although it conforms perfectly to what the settlement agreement or the judgment says it should. So then sometimes the judge will just sign it without that party who's essentially contesting it actually signing it themselves. But assuming for all intents and purposes the parties sign it, I then forward it to the court for filing, get the judge to sign it. I get a certified copy back and send it on to the plan administrator for processing, and then it is divided accordingly.
So I think one of the big takeaways that I want to leave people with is that QDROs are no joke. I mean, just from that brief description, it's a specialty practice. It's something that an attorney should be preparing for you. It's something that you should be engaging an attorney to prepare, and it's not something that regular attorneys should have anything to do with. It is a specialty part of the practice. It takes a unique understanding and knowledge. And from my experience, I haven't had any clients actually of mine that have had QUADROS kind of drawn up incorrectly in the past. But I get calls from people that have issues with like QUADROS that weren't accepted by the plan administrator after the fact. And it's kind of an est show. It's not like an automatic fix. So it's, you know, it's, I guess, Corey, it's something that you would suggest that people really engage someone that knows what they're doing, that this is a common practice of their legal practice. And how would someone, Corey, reach out to you? How do they make contact with you to kind of learn more about how you could help them?
Yeah, typically I'll get a client or potential client call me after a referral from a family law attorney or mediator like yourself. And they kind of have basically the questions you've been asking me, just asking for a general idea of what the process is. Costs obviously are always something that they want to know. So things of that nature. But yeah, I'll absolutely agree with you, Scott. It's really imperative that you have someone who practices in the area of employee benefits or ERISA law who has knowledge of QDROs actually drafting these for you. Because aside from the marital home, really, the retirement benefits are typically one of the largest assets of divorcing spouses. So it's very important that it be done correctly.
Yeah. Well, so to learn more, contact Corey, contact myself. I don't do QDROs, like I said. My office doesn't do them. My paralegal used to do them when she worked for a different attorney. But I think again that it's something that it's a specialty area of the law. And so I refer 100% of those out to Corey and attorneys that have that background and understanding. So Corey, you can contact Corey in the description. I'll include his contact information and his firm's information. But thanks for being here today. And And if you need more specifics about the process, you know that Corey is absolutely someone that, that can do that work. So give him a shout.
