Once a week our gardener and his fearless crew, mow the lawn, blow the leaves and debris off the patio, and if we’re lucky pull weeds and fertilize. Our last three “crews” were terrific during the first month on the job during which time they dazzled me with their attention to detail and deep understanding of their predecessors’ shortcomings. In time, however, our gardener became somewhat complacent and dreams of Sunset Magazine photographing our yard faded. I have come to accept this “Mow and Blow” approach as my gardener is relatively inexpensive, very kind, and leaves me enough to do on my own so that I can experience the catharsis that comes with getting dirty; as well as the pride that comes with new bloom . So, there you have the metaphor.
The “Mow and Blow” QDRO would look like any other QDRO on the surface. It contains accurate information regarding the parties and retirement plan at issue; and addresses the obvious such as the alternate payee’s assigned share, distribution of benefits, and benefits payable upon death of the parties. [Please stay with this just another moment, as I promise to end soon.] Unfortunately, a QDRO that appears “well-manicured” on arrival may not look so great in the coming weeks or months if not properly treated for weeds, aphids, snails, and the like.
Enough of that! To add some substance to this remedial comparison, any QDRO must pay particular attention to the following:
- The terms of the parties’ Judgment of Marital Settlement Agreement which may necessitate tweaking traditional allocation formulas; adjusting for equalizing payments; complying with agreed upon valuation dates that may differ from the date of separation, and treatment of plan loans, to name a few. Presumably, family law attorneys include such provisions in the Judgment for a reason.
- The unique features of the retirement plan at issue which dictates the proper allocation formula to use to determine the community property interest; as well as plan distribution rules, procedures and options; disability benefits; early retirement incentives; enhancements; survivor and death benefits.
- In the case of a privately owned company’s defined benefit plan, for example, special consideration must be given existence of a premarital interest; the asset value versus the present value of the accrued benefit; the relative interests of all both parties’ interests where husband and wife are both participants; the relative interests of other employees/participants, if any; and of course, the terms of the plan with regard to distribution options and death provisions.
- In the case of a defined contribution plan, special consideration must be given to existence of a premarital interest; the plan’s valuation date; the plan administrator’s ability or willingness to calculate earnings or losses through a current date; loan provisions; and non-liquid assets or “alternative” investments such as real estate, annuities, and life insurance.
- In the case of governmental plans, whether a segregated account is available; the pros and cons of creating a segregated account; characterization of potential or actual disability benefits; the availability of death/survivor benefits (and “costs” involved); and interplay with Gillmore rights.
It has become commonplace for family law practitioners to outsource retirement plan issues and QDROs in particular. As self-serving as this may be, we highly recommend steering your clients away from low budget QDRO preparers and towards experienced attorneys who don’t mind getting dirty.