Washington Qualified Domestic Relations Order (QDRO) FAQ's

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By Law Offices of Raj Bains, P.S.C.

Published: July 17, 2004

What is a Qualified Domestic Relations Order (QDRO)?
A Qualified Domestic Relations Order (QDRO) is a specific type of court order that awards a portion of a retirement benefit to the employee's former spouse, who is called an alternate payee. Retirement benefits constitute property rights in the nature of deferred compensation, even if the benefits are not presently payable.
What does a QDRO do?
The QDRO requires the plan administrator to recognize the rights of the alternate payee in the plan and to make distribution of the alternate payee's share of the benefits directly to the alternate payee
Are there certain requirements that a QDRO must meet?
Yes. A QDRO must meet the following requirements:

(a) It must be a court order or decree;
(b) The name of each specific plan to which it applies must be set forth;
(c) The employee and the alternate payee must each have their respective name and address set forth;
(d) It must allocate the retirement benefit by setting forth the amount of the benefit or the percentage of the benefit the alternate payee is to receive, or it must specify the manner in which the division of the retirement pension is to be determined;
(e) It must specify the time period during which the payments are to be made.
So long as those requirements are met, then can I have the QDRO provide for anything I want?
No. A QDRO cannot order the plan administrator to pay any benefits not provided for in the plan, or make a lump sum payment when the plan does not provide for one, or to recognize a joint and survivor annuity when there is no provision for this type of payment arrangement in the plan.
What are the tax consequences of having a QDRO?
There could be very significant tax consequences if a QDRO is adopted. As such, a tax attorney, actuary or financial planner should be consulted. Generally speaking, if the court orders the employee to pay retirement benefits to the former spouse when received, the employee bears the income tax burden. On the other hand, if a QDRO has been adopted, then the alternate payee (non-employee, former spouse) is taxed on the benefits received by the alternate payee (non-employee, former spouse).
I am afraid that I will be losing my share of the retirement benefit through my husband's employer if he continues to work after our marriage has ended. How can I calculate my share of the retirement benefit if he continues to work?
Washington courts abide by the general principle that increases in retirement benefits occurring after separation should not be treated as separate property, if the increase was enhanced by community efforts over many years. As a result, courts often follow what has become known as the Bullicek formula to determine an alternate payee's interest in retirement benefits. Generally speaking, under that formula, the alternate payee's interest is 50 percent of the employee's accrued benefit in the plan earned from the date of the marriage until the date of separation. In other words, to calculate your interest:
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1/2 x Total Months of 		Monthly Benefit at
Service During Marriage 	x 	Retirement
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Total Months of Accredited
Service at Retirement Date
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