Qualified Domestic Relations Orders in Maine

Pensions and retirement plans are often key assets in a relationship so, if you’re going through a divorce in Maine, you’ll need to resolve with your spouse what happens with these assets.

To make changes to pensions and non-governmental retirement plans governed by ERISA after a divorce, you will require a Qualified Domestic Relations Order (or QDRO/”Quadro” for short).

This sounds complicated but is simply an order that informs a pension plan administrator how to distribute all or part of a person’s retirement benefits from one spouse to the other after a divorce.

Marital property must be divided equitably during divorces in Maine. So, regardless of who made the contributions to the pension plan, both parties are likely to have considerable interest in how it is divided.

Qualified Domestic Relations Orders are formal authorizations for the divisions to be made.

The order must be approved by both the family law court and the plan administrator and, to be effective, it must be written precisely. This is a highly technical process but a qualified divorce lawyer can help you draft the documentation needed to execute a QDRO.

Learn More → Orders of Protection from Abuse

To be considered a QDRO by the Maine family courts, the State Retirement System says that it must specify the following:

• The name, social security number and last known mailing address, if any, of the member or retiree and the name, social security number and mailing address of each alternate payee (e.g., the spouse, former spouse or child of the employee spouse) covered by the order.
• The participant’s plan identification number if it is different from the participant’s Social Security number.
• The amount or percentage of the member’s or retiree’s benefits to be paid by the retirement system to each alternate payee or how the amount or percentage is to be determined.
• The number of payments or the period to which the order applies.
• That the order applies to the retirement system.

Qualified Domestic Relations Orders must NOT:

• Require the retirement system to provide a type or form of benefit or an option not otherwise provided by the retirement system.
• Require the retirement system to provide increased benefits determined based on actuarial value.
• Require the payment of benefits to an alternate payee that are required to be paid to another alternate payee under another order previously determined to be a QDRO.
• Require the payment of benefits to an alternate payee before the retirement of a member other than when the payee reaches the member’s normal retirement age, the distribution of a withdrawal of contributions to a member or other distribution to a member required by law.

Your QDRO must meet the above requirements, as well as several other criteria that your divorce lawyer can advise you on.

When a Domestic Relations Order is received by a pension plan administrator, a decision must be made about whether to “qualify” or approve it.

The chief executive officer (or the chief executive officer’s designee) will consider the case and notify the member or retiree and each alternate payee (beneficiary) of the decision:

If the order is determined to be valid, it is presumed to comply with all requirements:

• The retirement system will pay benefits per the order and give effect to the plain meaning of its terms notwithstanding any failure of the order to cite or reference statutory or rule provisions.
• A beneficiary or recipient of a right or benefit provided for or awarded in a QDRO may not be deprived of that right or benefit by a subsequent act or omission of the member, another claimant or beneficiary or the retirement system.

If the order is determined NOT to be a qualified domestic relations order:

• The member or retiree or any alternate payee named in the order may appeal the decision or petition the court that issued the order to amend it so that it qualifies.
• The court that issued the order or that otherwise has jurisdiction can amend the order so that it will be qualified even though all other matters incident to the action or proceeding have been fully and finally adjudicated.

In Maine, pensions and retirement plans (e.g., IRAs and 401Ks) that accumulate during a marriage are considered marital property and are subject to equitable division.

This doesn’t necessarily mean that they are divided down the middle. Pensions and retirement plans are considered part of the overall “marital estate”, which is usually divided during a negotiation process that considers each spouse’s interests in the overall assets.

For a pension to be divided, the divorce decree must order that the assets are divided. This is where Qualified Domestic Relations Orders come in. The order must be approved by the plan administrator before the amendments take effect.

According to federal law, a final judgment of divorce is not necessary to obtain a QDRO. A settlement agreement may be sufficient if it contains all the required information.

After the divorce is final, if the domestic relations order has not yet been drafted, you should complete the process as soon as possible. Your divorce lawyer should arrange the following steps:

1. Obtain the necessary pension/retirement plan information.
2. Review how the separation agreement divides the benefits.
3. Draft the domestic relations order.
4. Send the order to the retirement plan administrator for pre-approval.
5. Once the order is pre-approved, submit it to the court for filing and signature.
6. Submit it to the retirement plan for “qualification” (which is when a DRO becomes a QDRO)

Sometimes, these steps are far from straightforward as ex-spouses may be unhelpful and their plan administrators reluctant to provide information to beneficiaries. Potential roadblocks include:

• The pension/retirement plan administrator doesn’t provide the requested plan information even though beneficiaries are entitled to the same information about benefits as participants.
• Locating and reviewing the separation agreement to see whether it has specific instructions about pensions/retirement plans (many agreements use generic language).
• Calculating the correct share for 401(k), 403(b), or other Defined Contribution Retirement Plans, particularly concerning gains/losses and investment earnings.
• Reduced assets due to withdrawals before the QDRO is sent to the plan: this issue can be avoided by putting the retirement plan on notice that a QDRO is being drafted and submitted, particularly if the participant is near retirement age,

There is no statute of limitations to obtaining Qualified Domestic Relations Orders but an individual may risk losing benefits if his/her former spouse does any of the following before the QDRO is submitted to and accepted by the pension plan:

• Retires
• Remarries
• Dies
• Quits or is terminated
• Withdraws funds from the plan before retirement
• Takes out a loan that is secured by the plan account

It’s always best to take the necessary steps to obtain a QDRO as soon as possible once the divorce is largely finalized and upon consultation with your divorce lawyer.

Start by speaking to an experienced divorce lawyer at The Maine Divorce Group during an initial consultation.