One of the trickier issues in a Galveston divorce is dividing a spouse’s retirement or pension plan. These assets are generally managed by third-party administrators. And as a matter of law, the administrator cannot directly pay any benefit to the non-employee spouse without a court order.
More specifically, a Galveston judge must issue a qualified domestic relations order (QDRO). This is a separate order from the actual divorce decree. A QDRO is issued to the pension plan administrator, who must then determine if the order is “qualified.” For example, the Teacher Retirement System of Texas, one of the state’s largest pension plans, says it can only qualify a QDRO when the following conditions are met:
- The order “clearly specifies” the name of the pension plan, as well as the names and addresses of the plan participant and any alternate payee (i.e., the other spouse);
- The order states the “amount or percentage of the participant’s benefits payable” to the other spouse or the “manner in which such amount or percentage is to be determined”; and
- The order states the “number of payments” or the period of time in which it is applicable.
The plan administrator may reject a QDRO if it is defective in any way.
The Difficulty in Changing a QDRO
It is important for divorcing spouses to resolve any outstanding issues regarding the division of a pension plan. Once the divorce is final and the judge issues a QDRO that is accepted by the plan administrator, it can be very difficult to amend or correct the distribution. Even if you think there was a mistake in determining the division of the pension plan, the judge is not required to grant your request for a new order.
Here is a recent case in point. A husband and wife received a divorce in July 2015. At the time the judge ordered the division of the husband’s 401(k) plan. The wife was to receive $120,000 from the pension plan, with the husband retaining the balance, which at the time had an estimated value of about $186,000.
In August 2015, the judge issued a QDRO, which the plan administrator qualified. But approximately four months later, the husband asked the court to “modify or clarify the QDRO.” He maintained the “valuation date” of the 401(k) was incorrect and did not accurately reflect the division of property in the divorce decree. The judge denied the husband’s motion.
An appeals court also ruled against the husband. The court noted the burden was on the husband to prove an amendment was justified under the law. But he failed to explain how the purported discrepancy in the valuation date would actually affect how much his ex-wife received from the 401(k). Nor was the order itself vague or unclear in any way. Accordingly, the court dismissed the husband’s request for a new order.
Need Help From a Galveston Divorce Attorney?
The division of property in a divorce is often complicated, especially if you and your spouse have significant assets. It is important to work through any outstanding property division issues in a thorough, professional manner in order to avoid any misunderstandings later. If you need assistance from an experienced Galveston divorce lawyer with this or any related subject, contact the Law Offices of Tad Nelson & Associates today.