Effectively Waiving Retirement Benefits in a Settlement Agreement
During the statewide broadcast of PBI’s Family Law Update today, my colleague David Ladov asked me to post the features that a marital settlement agreement would have to contain in order to qualify as a QDRO (qualified domestic relations order). A QDRO is one of two possible ways that someone may waive his or her right to receive a share of his or her ex-spouse’s retirement benefits (the other being a beneficiary designation form). According to the U.S. Supreme Court’s 2009 decision in Kennedy v. Dupont, a marital settlement agreement by itself was not good enough to waive an ex-wife’s interest in an employer-sponsored pension plan, in the absence of a QDRO or beneficiary designation form.
I suggested during the broadcast that some divorce lawyers might wish to avoid this problem by crafting marital settlement agreements that would qualify as QDROs. The requirements for QDROs under federal law are summarized on the website of the employee benefits administrator Hewitt Associates, as follows:
- The instrument must be a court order, judgment or decree signed by a judge or other state-approved court official.
- The instrument must relate to marital property rights or alimony, or the support of a child of the participant.
- The instrument must contain a statement that it is issued pursuant to state domestic relations law.
- The instrument must include the name, last known address, social security number and date of birth of the participant and alternate payee.
- The instrument must describe the amount or percentage of benefits to be awarded to the alternate payee.
- The instrument must indicate the manner of payment and when payments begin.
There are a couple of additional requirements (actually, three things the QDRO cannot do) that are described on Hewitt’s web site. In a case where a spouse is waiving his or her rights to an ex-spouse’s retirement benefits, these last few requirements might be irrelevant.
The first requirement listed above could be an obstacle in counties where settlement agreements are not routinely attached to the divorce decree or filed of record. Yet, a consent order incorporating a marital settlement agreement should be sufficient to satisfy this requirement. It is less clear that a consent order referring to an unattached settlement agreement might satisfy the requirement.