Avoiding Malpractice when Dealing with

By: Matthew Lundy, Esq.
1-855-QDRO-LAW (737-6529)
[email protected]
Who thinks that they can identify all of the
issues that must be addressed in a marital
settlement agreement and/or final judgment
when it comes to dividing a retirement
Who thinks that they can correctly define the
word “QDRO”?
How long does a plan have to review a QDRO?
Frequency as an issue; how much money is in
qualified retirement accounts in the United
The economy--The housing marketing
You represent the Wife in a highly contested divorce.
The parties have no children, and no assets other than
Husband’s retirement account, which was set up by his
employer, Bank of America.
You are now at mediation, and you never thought the
case would settle, but apparently you and opposing
counsel did a good job talking your clients down.
Miraculously, the parties turn the corner. Husband
makes a good offer for alimony, and that leaves only
the issue of division of his retirement account. You
have statements for the retirement account, but no
summary plan description, and you have not consulted
with a QDRO attorney. What do you do?
Option 1: Reserve on the issue until you can get
full discovery and discuss the issue with someone
who regularly deals with QDROs.
Option 2: Draft in the alternative, and clearly lay
out the parties’ intent, and leave open the option to
modify the agreement solely as to that issue; make
sure that appropriate benefits are covered before
agreeing to finalize.
Key cases to consider. : Blaine v. Blaine, 872 So. 2d 383
(Fla. 4th DCA 2004); Padot v. Padot, 891 So. 2d 1079 (Fla.
2d DCA 2005); Jones v. Treasure, 984 So. 2d 634 (Fla. 4th
DCA 2008); Samaroo v. Samaroo, 193 F.3d 185 (3d Cir.
Qualified Domestic Relations Order (“QDRO”): A Qualified Domestic Relations
Order is a domestic relations judgment, decree or order which creates or
recognizes the existence of an alternate payee’s right to, or assigns to an alternate
payee the right to, receive all or a portion of the benefits payable with respect to a
participant under a qualified plan (i.e. employer sponsored).
 All QDROs must contain the following to be “qualified”:
• The name and last known mailing address of the participant
• The name and mailing address of each alternate payee;
• The amount or percentage of the participant’s benefit that the alternate
payee is to be paid, or the manner in which said benefit is to be determined;
• The number of payments or period of time to which the order applies; and
• The official name of the plan
• (see ERISA § 206(d)(3))
QDROs must relate to either support or property division (see IRC §
A QDRO may not alter the amount, form, or other provisions of benefits
otherwise payable under a qualified plan.
Defined Contribution Plan: a plan that provides
for an individual account for each participant and
for benefits based solely on the amount
contributed to the participant’s account, and any
income, expenses, gains and losses, and any
forfeitures of accounts of other participants which
may be allocated to such participant’s account (see
IRC § 414(i)); think of this as a basic 401(k),
although there are variations; what you take out
will be based on what you actually put in; ERISA
does not cover Individual Retirement Accounts
Defined Benefit Plan: The Internal Revenue
Code defines these as any qualified plan that is
not a defined contribution plan (see IRC §
414(j)); think of this as a pension plan; the plan
is generally only funded by the employer and
employees earn credits based on years of
service and other factors that vest on a predetermined schedule
Contempt of support orders and orders to pay fees
Nowhere does it say that a QDRO has to follow a
Final Judgment
Fees: Similar to support (need/ability standard;
treated as “support” in bankruptcy and thus nondischargeable; Fla. Stat. § 61.16 and 742.045;
“Grossing Up”: “X” divided by 0.8 or “x” times 1.25
= Amount to be used in QDRO
1) 10% early withdrawal penalty
2) 20% withholding
3) Roth 401(k): Withholdings depend on
portion that is contributed by employee,
earnings on that portion, and portion
contributed by employer (pre-tax vs. after tax)
4) IRAs
1) Valuation: Make sure that you know the actual
value of the account on the date of valuation, and
that you are aware of any stock options that vest
and/or matching that may occur at the end of the
Get Mandatory Disclosures (Statements and Summary
Plan Description)
 Know your vesting schedule
2) Passive Gains and Losses: Changes in value from
valuation date to date of segregation of accounts;
See Hoffman v. Hoffman, 841 So. 2d 695 (Fla. 4th DCA 2003)
3) Outstanding Loans: Will they factor into award?
Survivor Benefits
a) Qualified Joint and Survivor Annuity
b) Qualified Pre-Retirement Survivor Annuity
Duration and Benefit Commencement
Shared Interest b) Separate Interest c) Lump Sum
How do you get a valuation?
Cost of Living Adjustments
Early Retirement Subsidies
Two Plans
FRS Pension Plan (Defined Benefit Plan)
 Always use a shared interest approach
 Survivor Benefits may or may not be available, depending
upon whether the employee is active or not; four
retirement options
 Deferred Retirement Option Program (DROP)
 See Pullo v. Pullo, 926 So. 2d 448 (Fla. 1st DCA 2006)
 Always know the marital portion as of the date of
FRS Investment Plan (Defined Contribution Plan)
 Gains/Losses
Why you need to hurry when it comes to
How long should drafting take?
Pre-Approval versus Post-Entry Approval
Who should be responsible for preparing a
Attorney versus Non-Attorney
 Liability Issues: Shifting to another attorney
How should fees and costs be divided?
Who should be required to contact the drafter?
State in your engagement letter that:
you do not handle QDROs;
if a QDRO is necessary, it will require a separate fee
to be paid by the client; and,
a retirement account or a claim to the benefits under
same may be at risk if the client does not seek and
obtain a QDRO immediately upon the execution of a
settlement agreement or entry of any Final Judgment
or other ordering necessitating a QDRO.

similar documents