06 May I was awarded my ex’s pension but I can’t get it. What can I do?

Q. As part of my divorce, I was awarded my ex-husband’s entire pension plan. The value was $110,000. Half was to be released immediately and the other half was to remain frozen until further notice of the court. I needed to prepare a QDRO with a gold seal and I did and mailed it. Then the custodian told me I couldn’t get any money until my ex turns 65 years old. They also said the QDRO wasn’t worded correctly. I was told I needed another QDRO. What should I do?
— Divorced

A. We’re sorry you’re going through this confusion.

Pensions and other retirement assets are routinely divided by way of Qualified Domestic Relations Order (QDRO) as part of equitable distribution in divorce.

The language contained within a QDRO is crucial as it will dictate the interpretation and implementation of the QDRO by the plan administrator, said Thomas Roberto, Thomas Roberto, a family law attorney with Adinolfi, Lieberman, Burick, Falkenstein, Roberto & Molotsky in Haddonfield.

He said when preparing a QDRO, the starting point is normally the divorce settlement agreement or court order, which provides for the distribution of the retirement asset at issue. The QDRO is then prepared based on the language of the settlement agreement or court order, Roberto said.

“So the first question is whether the agreement and/or order was drafted correctly, consistent with the intent of the parties and any applicable limits contained within the plan guidelines,” he said. “The second question then becomes whether the QDRO itself was drafted correctly, consistent with the terms of the agreement or order.”

Roberto said it’s important for the attorney or self-represented party preparing the settlement agreement to be familiar with the terms of the retirement plan at issue.

Particularly with regard to pensions, the plan guidelines can be complicated and very specific as to the extent and timing of the benefits that may be provided to an ex-spouse, he said.

“Some pension plans may limit the amount an ex-spouse can receive, and/or preclude an ex-spouse from collecting his or her share of benefits until such time as the participant-spouse actually retires,” he said. “If that is the case, other arrangements could be made in the settlement agreement.”

For example, the parties could agree to have all or a portion of the ex-spouse’s share of the pension paid from a different source such as an IRA, bank account or investment account that does not have the same restrictions, he said.

In any case, knowing the plan guidelines is key to ensuring that the appropriate terms are included in the settlement agreement, and subsequently the QDRO itself, he said.

“Unfortunately, it is not uncommon for a QDRO to be drafted incorrectly in a manner inconsistent with the intent of the parties as expressed in the settlement agreement or order,” Roberto said. “To that end, most family law attorneys advise clients to have their QDROs prepared by an independent accountant who can accurately and precisely craft the necessary language.”

Many attorneys also recommend having the QDRO pre-approved in advance, before submitting it to the court for execution and gold-seal, he said.

The attorney or accountant would submit a draft of the QDRO to the plan administrator first. The plan administrator will then advise as to whether the draft QDRO is acceptable and can be implemented as written.

“The pre-approved QDRO can then be sent to the court and once it is executed by a judge and a gold-seal affixed thereto, resubmitted to the plan administrator for implementation,” Roberto said. “While the process of pre-approval does require an additional step, it is normally well worth the time and effort as it helps to ensure the QDRO is correct and acceptable before it is even finalized.”

It is possible to have a final QDRO amended, Roberto said. It can be prepared with the correct language, supplanting the previous QDRO, and resubmitted to the court and plan administrator.

The amended QDRO would then effectively take the place of the prior incorrect QDRO.

He said in your case, if the initial QDRO was in fact drafted incorrectly and the plan administrator has already advised that it cannot be implemented as the parties intended, your can probably be amended.

The bigger question here may be whether the plan guidelines limit or preclude the amount or timing of the distributions to the ex-spouse, he said.

“If the QDRO cannot be amended to reflect the parties intention because of restrictions in the plan guidelines or otherwise, resulting in financial detriment to one spouse, that may necessitate reformation or modification of all or part of the settlement agreement or order to compensate the aggrieved spouse for what he or she would have received if the QDRO were prepared precisely as intended,” he said.

You should have your agreement and QDRO reviewed by an experienced family law attorney to determine what options are available moving forward.

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This story was originally published on May 6, 2020.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.