A QDRO for a 401(k) divides an account balance, while a QDRO for a pension divides a stream of monthly payments, and each kind of order has to answer questions the other does not.
Account Plans: Fix the Date and the Gains
A defined contribution plan such as a 401(k) holds a balance in the participant’s name, so the order states the share as of a date and who bears the gains or losses after it. In Killingsworth v. Killingsworth, 286 Ga. 234 (2009), the decree gave the wife “one-half (1/2) of the Husband’s retirement account as of November 13, 2006, together with any gains or losses accruing on said amount subsequent to the hearing.” Likewise, in Mermann v. Tillitski, 297 Ga. 881 (2015), the wife took half of the husband’s SEP IRAs as of the agreement date plus “her pro rata share of all investment experience, including earnings and losses,” and the trial court could not cut off her gains at 30 days because her QDRO was late; that “improperly modified a fixed division of property.”
Pension Plans: Fix the Formula and the Timing
A defined benefit plan, a traditional pension, pays a monthly benefit at retirement, so the order states a share of that benefit and when payments begin. In Halbert v. Halbert, 220 Ga. App. 615 (1996), the QDRO gave the ex-wife “35% of the Husband’s interest in the retirement benefits payable under the Plan,” starting at the earlier of his retirement or his unreduced retirement date, plus 35 percent of any early retirement subsidy. Our posts on retirement clauses and retirement terms cover the years-of-marriage formula and survivor benefits.
Plans Outside ERISA
Government plans follow their own rules: in Howington v. Howington, 281 Ga. 242 (2006), a federal civil service pension was divided by an order issued “in accordance with Part 838 of Title 5 of the Code of Federal Regulations,” not under ERISA. Military retirement has its own post.
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This post is a quick overview of the law and is not intended as legal advice. Please feel free to contact our office for a consultation if you have questions about this or any other legal aspects regarding your case!