A Qualified Domestic Relations Order (QDRO) is a legal document that recognizes an individual's right to receive a portion of the retirement plan benefits of their spouse or former spouse. It contains model language for a defined contribution plan and provides detailed guidelines throughout, ensuring that the domestic relations order meets all requirements for approval. Important note: Only court-certified orders can become valid QDROs.
In the midst of navigating the complexities of a divorce, particularly when it involves the division of retirement assets, understanding and properly completing a Qualified Domestic Relations Order (QDRO) becomes crucial. The FRS Investment Plan QDRO is a document specifically designed for the division of defined contribution plan assets, containing model language and detailed instructions to guide individuals through this delicate process. This document is divided into sections starting with general instructions and moving through specifics such as identifying both the plan member and the alternate payee, detailing marital history, defining benefit distribution options, and outlining the form of payment and the commencement of benefits. Additionally, it addresses contingencies such as the death of either party and the legal jurisdiction if there are disputes over the qualification of the order, as well as taxation issues and the avoidance of constructive receipt. It's designed to ensure that all necessary information is captured accurately so that the domestic relations order can be approved without issues. By meticulously following the outlined instructions and filling in every requested detail, parties can help ensure their domestic relations order is completed correctly, potentially easing one aspect of the transition through divorce.
The FRS Investment Plan
Qualified
Domestic Relations
Order
Defined Contribution
Plan Instructions and
Model Language
Instructions for Using the Model Language Provided
General Information
This document contains model language for a defined contribution plan Qualified Domestic Relations Order (QDRO). Pages 1 through 3 contain explanations and instructions that apply to the model QDRO language on pages 4 through 8. The explanations contain answers to most questions you may have about the model language. If you follow the instructions carefully, your domestic relations order should meet all qualifications for approval. Be sure to fill in every line wherever information is requested.
If you would like more information on the qualification process, see the Procedures document.
Since there are a number of different ways to design a QDRO and provide for division of benefits, the Plan makes no representation as to which method is best for the parties involved.
Note: Only court-certified orders can be qualified.
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Instructions
1. Plan
In this section, you are asked to specify the defined contribution plan under which the member’s benefits are being assigned. The plan name is Florida Retirement System Investment Plan (or FRS Investment Plan).
2. Member
In this section, you are asked to identify the member whose benefits are being assigned. Fill in the following information about the member:
•Complete name
•Current mailing address (including ZIP Code)
•Social Security number
•Date of birth
3. Alternate Payee
In this section, you are asked to identify the alternate payee to whom the benefits are being assigned. Please fill in the following information about the alternate payee:
•Complete Name
•Current Mailing Address (including ZIP Code)
•Social Security Number
•Date of Birth
•Relationship to member
Note: It is acceptable to provide the addresses, Social Security numbers, and/or dates of birth on an attached document which is cross-referenced in the domestic relations order.
4. Marital History
In this section, you are asked for the dates when the participant and the alternate payee were married and divorced. Fill in the dates of marriage and divorce. If you are assigning a marital fraction, these dates will be used to determine the marital fraction
5. Definitions
The model language includes some defined terms with which you may not be familiar. These terms will be used throughout the order.
6. Benefit Payable to the Alternate Payee
In this section, you are asked to choose one of two options for specifying the dollar amount or percentage of the vested account balance to be paid, when it will be calculated, and whether any outstanding member loans and earnings/losses are to be included in the alternate payee’s benefit. Each option uses a different method: Option A uses a straight percentage method, Option B uses a dollar amount method, and Option C uses a marital fraction.
Your order cannot use a combination of these methods. Select one method only.
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Option A. Straight Percentage
Please provide the following information:
•The percentage of the member’s Vested Account Balance that is to be assigned to the alternate payee
•The date the Vested Account Balance is to be calculated (known as the valuation date)
•Whether the alternate payee’s benefit will (or will not) be adjusted for earnings or losses during the period between the valuation date and the liquidation date
Option B. Dollar Amount
Please provide the dollar amount of the member’s Vested Account Balance that is to be assigned to the alternate payee.
Option C. Marital Interest
(This option can be used only if the member has previously transferred a benefit in the FRS Pension Plan (Defined Benefit Plan) to the FRS Investment Plan.
Please provide the percentage of the marital interest in the member’s vested accrued benefit that is to be assigned to the alternate payee. The member’s benefit in the Investment Plan will be valued as the date of the benefit transferred into the Investment Plan.
Note: The marital property fraction will be based on the dates provided in Section 5 of this order and on the participant’s employment history.
7. Form of Payment
This section describes the intended form of payment to the alternate payee. Plan benefits are usually paid immediately in a lump-sum cash distribution. This amount reflects any earnings and losses from the liquidation date to the date of distribution to the alternate payee.
8. Commencement
This section states when payment of benefits to the alternate payee will begin. Typically, the Plan permits payment to begin as soon as administratively possible following the determination that the order has been qualified.
9. Death Procedures
This section specifies procedures for payments of benefits under the QDRO in the event of death of either the member or the alternate payee.
10. Retention of Jurisdiction
This section outlines what is required of both parties if the Plan Administrator initially determines that the order is not qualified. It also states that the court (named earlier) expressly reserves jurisdiction over the dissolution proceeding involving the member, the alternate payee, and the member’s interest in the Plan.
11. Limitations
This section provides specific legal limits on the order.
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12. Taxation
This section explains that any payments made to the alternate payee, who is a spouse or former spouse, will be subject to the appropriate federal, state, and local taxes.
13. Constructive Receipt
This section outlines what the member and the alternate payee are required to do if either receives benefits from the Plan that should have been paid to the other party.
14. Certification of Necessary Information
This section explains that the court may require the member and the alternate payee to certify in writing that the information on which this order is based is accurate.
Note: Only original court-certified orders can be qualified.
END INSTRUCTIONS—MODEL LANGUAGE FOLLOWS
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STATE OF _________________ CASE # ___________________
COUNTY OF _______________
IN THE ____________________ COURT OF ________________
IN RE TO THE MARRIAGE OF:
__________________________________________
Petitioner and
Respondent
Qualified Domestic Relations Order (Defined Contribution Plan)
This order creates and recognizes the existence of an alternate payee’s right to receive a portion of the member’s benefits payable under the FRS Investment Plan, which is qualified under Section 401 of the Internal Revenue Code (the “Code”). This order is intended to be a qualified domestic relations order (“QDRO”), as that term is defined in section 206(d) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and section 414(p) of the Internal Revenue Code of 1986, as amended (“Code”). This order is entered pursuant to the authority granted under the applicable domestic relations laws of the State of _________________________________.
This order applies to the FRS Investment Plan (the “Plan”)
Any successor to this plan shall also be subject to the terms of the order.
The name, address, Social Security number, and date of birth of the member are as follows:
Name:
Address:
Social Security Number:
Date of Birth:
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The person named as alternate payee meets the requirements of the definition of alternate payee as set forth in Section 4 of this order. The alternate payee’s name, address, Social Security number, date of birth, and relationship to the member are as follows:
Relationship to Member:
The alternate payee shall be responsible for notifying the Plan Administrator in writing of any changes in his or her mailing address subsequent to the submission of this order.
Date of Marriage:
Date of Divorce:
Alternate Payee—The alternate payee is any spouse, former spouse, child, or other dependent of a member who is recognized by a domestic relations order as having a right to receive all or a portion of the benefits payable under the Plan with respect to the member.
Liquidation Date—The liquidation date is the date the amount assigned to the alternate payee is transferred from the member’s Vested Account Balance to a separate account established for the alternate payee in accordance with the terms of the QDRO. An assignment as of the liquidation date assigns a portion of the member’s current Vested Account Balance.
Marital Interest—The marital interest is the member’s account balance benefit as of the Transfer Date multiplied by the following fraction:
Number of Marital Years (from the Date of Marriage to the Date of Divorce) while accruing benefits under the Plan
Years of Service during which the
member has accrued a benefit under the Plan up to the Transfer Date (the date the member’s benefit transferred into the Investment Plan)
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Plan Administrator—The Florida State Board of Administration (“SBA”) is the Plan Sponsor. SBA has contracted with Hewitt Associates LLC to process domestic relations orders in accordance with the FRS Investment Plan’s QDRO requirements. Hewitt’s Qualified Order Team will conduct the qualification process.
Transfer Date— The Transfer Date is the date the member transferred a benefit from the FRS Pension Plan (Defined Benefit Plan) into the FRS Investment Plan via an accumulated benefit obligation.
Valuation Date—The Valuation Date is the date on which the member’s Vested Account Balance will be valued in order to determine the alternate payee’s designated portion in accordance with the terms of this order. Accounts are valued on a daily basis.
Vested Account Balance—The member’s Vested Account Balance is the dollar amount the member has a nonforfeitable right to receive from the Plan.
(Choose Option A, Option B, or Option C. You may not choose more than one option)
Option A. Straight Percentage
The order assigns to the alternate payee an amount equal to _______ % of the member’s Vested
Account Balance under the Plan (identified in Section 1) as of ____________________ (insert
applicable Valuation Date).
From the Valuation Date to the liquidation date, the amount assigned to the alternate payee (select one):
Will be adjusted for investment earnings (gains and losses) from the Valuation Date to the date as of which the account is established for the Alternate Payee.
Will not be adjusted for investment earnings (gains and losses) from the Valuation Date to the date as of which the account is established for the Alternate Payee.
Option B. Dollar Amount
This order assigns to the alternate payee an amount equal to $_______ of the member’s Vested
Account Balance under the Plan (identified in Section 1) as of the liquidation date.
Option C. Marital Fraction
This order assigns to the alternate payee an amount equal to _______ % of the “marital interest” (as
defined in Section 4 and 5 above) in the participant’s account balance under the Plan (identified in Section 1) as of the Transfer Date.
The alternate payee is eligible for any available form of payment under the provisions of the FRS Investment Plan.
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The alternate payee shall be eligible to receive payment as soon as administratively reasonable following the determination that this order is a Qualified Domestic Relations Order. In no event can the alternate payee begin his or her benefit later than April 1 following the year in which the member attains age 70-1⁄2.
If the member predeceases the alternate payee prior to payment of the alternate payee’s assigned benefits under the QDRO, the alternate payee’s benefits will not be affected. In the event of the member’s death, the account balance, which remains the property of the member, will be payable to the member’s designated beneficiary or in accordance with Plan provisions. This order does not require the member to name the alternate payee as the beneficiary for the benefits not assigned to the alternate payee.
In case of the death of the alternate payee prior to distribution of the alternate payee’s benefits under the QDRO, the assigned benefits will be paid to the alternate payee’s designated beneficiary or, if none, in accordance with Florida law (Section 121.4501(20).
This matter arises from an action for divorce or legal separation in this court under the case number set forth at the beginning of this order. Accordingly, this court has jurisdiction to issue this order.
In the event the Plan Administrator determines that this order is not a Qualified Domestic Relations Order, both parties shall cooperate with the Plan Administrator in making any changes needed for it to become qualified. This includes signing all necessary documents. For this purpose, this court expressly reserves jurisdiction over the dissolution proceeding involving the member, the alternate payee, and the member’s interest in the Plan. This Order hereby vacates any previously issued QDRO in this case.
Pursuant to Section 414(p)(3) of the Code and except as provided by Section 414(p)(4), this order:
(i)Does not require the Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan;
(ii)Does not require the Plan to provide increased benefits; and
(iii)Does not require the payment of benefits to an alternate payee that is required to be paid to another alternate payee under another order previously determined to be a Qualified Domestic Relations Order.
12.Taxation
For purposes of Sections 402 and 72 of the Code, any alternate payee who is the spouse or former spouse of the member shall be treated as the distributee of any distributions or payments made to the alternate payee under the terms of the order and, as such, will be required to pay the appropriate federal, state, and local income taxes on such distributions.
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If the Plan inadvertently pays to the member any benefit that is assigned to the alternate payee pursuant to the terms of this order, the member will immediately reimburse the Plan to the extent the member has received such benefit payments and shall forthwith pay such amounts so received to the Plan within ten (10) days of receipt.
If the Plan inadvertently pays to the alternate payee any benefit that is actually payable to the member, the alternate payee must make immediate reimbursement. The alternate payee must reimburse the Plan to the extent he or she has received such benefit payments and shall forthwith pay such amount so received to the Plan within ten (10) days of receipt.
14. Effect of Plan Termination
If the Plan is terminated, the alternate payee shall be entitled to receive his or her portion of the member’s benefits as stipulated herein in accordance with the Plan’s termination provisions for members and beneficiaries.
15. Certification of Necessary Information
All payments made pursuant to this order shall be conditioned on the certification by the alternate payee and the member to the Plan Administrator of such information as the Plan Administrator may reasonably require from such parties to make the necessary calculation of the benefit amounts contained herein.
Dated this _________ day of ____________________, ______
By the court:
__________________________________________________
Judge’s Signature
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Filling out a Qualified Domestic Relations Order (QDRO) form is a crucial step in ensuring the proper division of retirement benefits following a divorce or legal separation. A QDRO allows for the division of pension plans, including defined contribution plans, by recognizing the right of an alternate payee, typically a spouse, former spouse, child, or other dependent, to receive a portion of the benefits. The process involves providing detailed information concerning the plan, the member (whose benefits are being divided), and the alternate payee. The clarity and accuracy of the information provided are essential for the approval of the QDRO. Below are the steps to accurately fill out the form.
Once the QDRO form is filled out with all requisite details, it should be reviewed for accuracy and completeness. The document then needs to be submitted for court certification. Only court-certified orders can be considered for qualification. This certification process is critical, as it ensures that the order complies with legal standards and accurately reflects the terms agreed upon or decided in the dissolution of the marriage. This step underlines the importance of submission of original documents for official actions and records.
What is a Qualified Domestic Relations Order (QDRO)?
A Qualified Domestic Relations Order (QDRO) is a legal document that splits and changes ownership of a retirement plan, allowing a divorced spouse to receive a portion of their ex-spouse's pension or retirement plan benefits. It must be approved by the court and the retirement plan administrator.
Why is a QDRO necessary?
A QDRO is required to legally divide retirement plan benefits between divorced spouses, ensuring that the division is recognized by both the courts and the retirement plan's administrator. Without a QDRO, any attempt to split these benefits may not be legally valid, potentially affecting financial settlements between the parties.
How is the amount or percentage distributed to the alternate payee determined?
The distribution can be determined in three ways: a straight percentage of the vested account balance, a specific dollar amount from the vested account balance, or a percentage based on the marital interest in the member’s benefits. The method selected must be clearly stated in the QDRO.
Can the QDRO affect loans and other deductions from the retirement account?
Yes, the QDRO can specify whether outstanding loans and earnings or losses on the account between the valuation and liquidation dates are to be considered in calculating the alternate payee's share.
What is the marital fraction method?
The marital fraction method is used to calculate the portion of the participant's retirement benefit that is subject to division. It takes into account the total period the participant accrued benefits during the marriage compared to the total period of benefit accrual, essentially dividing the retirement benefits pro-rata based on the duration of the marriage.
What information is required about the alternate payee?
The following information about the alternate payee is required: complete name, current mailing address, Social Security number, date of birth, and relationship to the member.
When do payments to the alternate payee begin?
Payments to the alternate payee typically commence as soon as administratively possible after the order has been qualified by the plan.
What happens to the benefits under the QDRO if the member or alternate payee dies?
The QDRO must specify the procedures for payment of benefits in the event of the death of either the member or the alternate payee, ensuring that the intended parties still receive the stipulated benefits.
Are there any tax implications for payments made to the alternate payee?
Yes, payments made to the alternate payee under a QDRO are subject to appropriate federal, state, and local taxes. The tax responsibility lies with the alternate payee receiving the benefit.
One common mistake individuals make when completing the Qualified Domestic Relations Order (QDRO) form is neglecting to fill in every requested detail. The instructions emphasize the importance of providing complete information, such as full names, current mailing addresses, Social Security numbers, and dates of birth for both the member and the alternate payee. Incomplete submissions can lead to delays in processing or even the rejection of the QDRO, complicating an already complex legal process.
Another frequent error is the incorrect selection of the division method for the vested account balance. The QDRO form offers three distinct options: a straight percentage, a dollar amount, or a marital fraction. Choosing the wrong method or attempting to combine methods can invalidate the order. It is vital for parties to understand the implications of each option to accurately reflect the agreed-upon terms of their domestic relations order.
Failing to accurately document the marital history is yet another pitfall. The form requires the specification of the dates when the member and the alternate payee were married and divorced. These dates are not merely procedural; they are critical for calculating the marital fraction, when applicable, to determine the portion of the vested account balance that is subject to division. Incorrect or vague entries in this section can significantly alter the distribution intended by the parties.
A misunderstanding of the form of payment can also lead to unexpected outcomes. While the default expectation may be a lump-sum cash distribution, individuals must comprehend the nuances of this choice, including the impact of earnings and losses from the liquidation date to the distribution date. Lack of clarity regarding this aspect can result in misunderstandings or disputes post-qualification of the QDRO.
Lastly, a significant mistake involves overlooking the procedures outlined for the event of either the member or the alternate payee's death. This section specifies how benefits under the QDRO should be handled, ensuring that the rights and intentions of both parties are preserved even after death. Ignoring these provisions can lead to complications and potential legal battles for surviving family members, undermining the initial objectives of the QDRO.
When handling the division of retirement assets in a divorce, the Qualified Domestic Relations Order (QDRO) is a crucial document that legally splits and changes ownership of a retirement plan to give a portion to a divorced spouse, child, or other dependent. However, the process often involves additional critical forms and documents to ensure the accurate and legal allocation of assets. Here is a descriptive list of other documents frequently used in conjunction with the QDRO form.
These documents collectively work with the QDRO form to navigate the complex process of divorce, ensuring that all financial aspects, including retirement assets, are fairly and legally addressed. For individuals going through a divorce, understanding and properly executing these documents is vital for safeguarding their financial future and conforming to legal obligations.
Divorce Decree: Similar to a QDRO, a divorce decree officially documents the dissolution of a marriage by a court. While a divorce decree may address the division of marital assets, a QDRO specifically details how retirement plans should be split, making them complementary documents.
Separation Agreement: This document outlines how spouses intend to manage their separation, including the financial aspects. Like a QDRO, it may detail the division of assets, but a QDRO is necessary for the division of specific retirement accounts following these agreements.
Marital Settlement Agreement (MSA): MSAs specify the terms of a divorce agreed upon by both parties, including asset division. The QDRO takes information from the MSA regarding retirement accounts and puts it into a format that retirement plan administrators can implement, ensuring the agreement's terms are followed.
Pension Sharing Order: Common in jurisdictions outside the United States, this order is akin to a QDRO as it directs how one party's pension should be divided with the other party upon divorce. Both documents serve to divide retirement or pension benefits due to marital dissolution.
Beneficiary Designation Forms: These forms indicate who will receive the benefits of retirement accounts, life insurance policies, and other assets upon the account holder's death. A QDRO may alter the beneficiary status in the case of divorce, thereby ensuring the alternate payee receives their awarded share.
Prenuptial Agreement: While a prenuptial agreement sets the terms for asset division before marriage, a QDRO enforces portions of such agreements or divorce settlements specifically regarding retirement accounts post-marriage.
Postnuptial Agreement: Similar to a prenuptial agreement but executed after marriage, a postnuptial agreement determines the division of assets upon divorce. A QDRO might be used to enforce this agreement regarding retirement accounts.
Child Support Order: Although primarily focused on the welfare of children post-divorce, like a QDRO, a child support order is legally binding. While a QDRO deals with retirement benefits, they both stem from the legal division of responsibilities and assets following separation.
Spousal Support Order: This order details financial support from one spouse to another after divorce. A QDRO may complement a spousal support order if retirement benefits are part of the support arrangements.
IRA Transfer Instructions: Similar to how a QDRO functions for employer-sponsored retirement plans, IRA transfer instructions dictate the transfer of IRA funds due to divorce or separation agreements. While different in form and regulatory requirements, both accomplish the division of retirement assets between parties.
Filling out a Qualified Domestic Relations Order (QDRO) form can be an essential step in dividing retirement benefits during a divorce or legal separation. It's a complex process, and the potential for mistakes can be high. Here are some guidelines on what you should and shouldn't do when completing a QDRO form:
Do's:
Read the instructions thoroughly - The QDRO form comes with detailed instructions that explain how to fill it out. Take the time to understand these instructions to ensure the order meets all qualifications for approval.
Use the model language provided - This language is designed to help you accurately describe the division of benefits. It reduces the risk of misunderstandings or errors.
Provide complete and accurate information - Fill in all required fields with accurate details about the member and the alternate payee, including names, addresses, Social Security numbers, and dates of birth.
Choose the correct method for dividing benefits - Decide between the straight percentage, dollar amount, or marital interest methods and ensure you do not mix these methods.
Specify the form of payment and commencement clearly - Clearly outline how and when the payments to the alternate payee will be made.
Don'ts:
Do not leave any blanks - Ensure every line where information is requested is filled out to avoid processing delays or rejections.
Avoid guessing information - If you're unsure about any details, take the time to verify them to prevent mistakes.
Do not use a combination of division methods - Stick to one method for dividing the benefits to maintain clarity and compliance with the plan's rules.
Do not ignore the limitations and legal constraints - Make sure your order abides by the specific legal limits and requirements outlined in the form instructions.
Do not submit without verifying accuracy - Both the member and the alternate payee should ensure that all the information provided is accurate and complete before submission.
Following these do's and don'ts can help streamline the process of completing a QDRO form, reducing the chances of errors and ensuring that the division of benefits is carried out as intended.
Many people find the process of understanding and completing a Qualified Domestic Relations Order (QDRO) form daunting, often leading to misconceptions about its purpose and requirements. Let's address four common misunderstandings:
Clearing up these misconceptions is essential for individuals going through the process of dividing retirement assets in a divorce. Understanding the specific requirements and scope of a QDRO will aid in ensuring a smoother, more informed transaction.
Qualified Domestic Relations Orders (QDROs) serve as a legal tool to divide defined contribution plan benefits, such as retirement accounts, between a plan member and an alternate payee typically in the event of divorce. Understanding the key aspects of filling out and using the QDRO form ensures that the division of these assets is processed smoothly and according to legal standards. Here are six crucial takeaways:
Professionals often recommend that individuals engage with legal or financial advisors to navigate the complexities of QDRO forms and processes. This ensures that the individuals understand their rights, options, and responsibilities fully, facilitating a more equitable and legally sound distribution of benefits.
Da Form 638 Fillable Pdf - By mandating the disclosure of personally identifiable information, the form balances the need for transparency in the nomination process with privacy protections.
Dr 835 - Changes to the representative's authority or contact information require updating the form to accurately reflect current arrangements.