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Lawrence D. Gorin
Lawrence D. Gorin, Family Law Attorney
Category: Family Law
Satisfied Customers: 1544
Experience:  30+ years family law experience. QDROs, UIFSA, UCCJEA expertise.
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In a Community Property Divorce law State , would a QDRO (funds

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In a Community Property Divorce law State , would a QDRO (funds not received as of yet, as such, will remain a QDRO for 3 more years) from my first marriage be subject to a 50/50 split should a divorce law be finalized before the 3 year wait period before a disbursement is granted me? Is Kansas a CP State?
First, Kansas is not a community property state. Instead, Kansas law provides that property in a divorce proceeding is distributed by the rule of "equitable division." This rule provides that instead of mechanistically looking at whose name is XXXXX XXXXX the “owner” of property or who “earned” the income used to purchase the property, the court deciding a marriage dissolution case decides how to ‘fairly and equitably’ divide the property accumulated by a married couple in the way determined by the judge after reviewing rules set out in the Kansas statutes.

Second, a QDRO is simply a domestic relation order (DRO) rendered by a court that is intended to comply (qualify) with the specifications of applicable federal law -- 26 USC
§ 414(p)
-- and the particular terms and provisions of the pension or retirement plan to which the order is directed. If the DRO complies with the federal law and the terms of the plan, the DRO will then become a Q-DRO (or simply a QDRO), meaning a "Qualified" DRO. And when that happens, the Plan administrator then becomes legally obligated to implement the terms of the court's order. Such implementation would generally occur immediately if the Plan participant is already retired at the time of divorce. If the Plan participant is not retired at the time of divorce, implementation of the QDRO so as to divide the Plan participant's retirement or pension entitlement may end-up be deferred until retirement occurs (or retirement age is attained).

You need to take a really good look at your divorce judgment and the QDRO document to see exactly and specifically what it says regarding the division of the retirement or pension entitlement.

Generally, once a QDRO is accepted by the Plan, the QDRO is binding (whether immediately implemented or intended for subsequent or deferred implementation) and the terms of the QDRO (and the award to the former spouse) will not be affected by the Plan participant's subsequent marriage to another spouse.

So if your first wife was actually awarded the right to receive 50% of whatever your retirement/pension interest might eventually turn out to be, that is what she would get, with the remaining 50% belonging to you.

In sum, the QDRO will remain a QDRO for 3 more years from your first marriage and would be subject to the 50/50 split as ordered by the court. The fact that disbursement might not available until three or more years down the line is irrelevant to the validity and enforceability of the QDRO.

Once the QDRO is
Customer: replied 5 years ago.
So, If a divorce where to happen, my current husband would be entitled to a portion of my Q-DRO awarded me some 20 years ago? Could it also be said that when my current husband retires in 4 weeks with a pension worth $500,000,00 and then put immediately into an IRA. Would I be entitled to any of those funds?

Note: My Q-DRO award cannot be executed until my ex is of retirement age that being fifty years old. That will be in three years. Would that award have been earning interest all these twenty years?

Q: So, If a divorce where to happen, my current husband would be entitled to a portion of my Q-DRO awarded me some 20 years ago?

A: No, it would not work that way. Your right to receive a portion of first husband's retirement entitlement, awarded to you 20 years ago at the time of your divorce from husband # XXXXX is a property asset acquired prior to your marriage to husband # XXXXX (rather than a property asset acquired during your marriage to husband # XXXXX). And this would be true even if your actual receipt of your court-awarded share of H #1's pension or retirement benefit is not actually received by you until three years from now (while you are married to H #2).

Q: Would that award have been earning interest all these twenty years?

A: Maybe yes, maybe no. I cannot provide an informed answer to this question until and unless you provide some additional information. Specifically, was the Plan a defined BENEFIT (pension) plan? Or is it a defined CONTRIBUTION plan? Further, exactly and specifically what is the wording of the divorce judgment regarding the division of the Plan? Did it award you 50% as of a specified date (such as the date of dissolution of marriage)? And did it include language saying that the amount of the award would be "adjusted by earnings, gains and losses thereon from the date of divorce to the date of account division" (or words to that effect)? It would be most helpful to also know what particular plan (official legal name of the plan) was involved?

Q: Could it also be said that when my current husband retires in 4 weeks with a pension worth $500,000,00 and then put immediately into an IRA. Would I be entitled to any of those funds?

A: Yes, in the event of a divorce, most likely. Assuming you have been married to current husband for at least one year as of the time he retires in 4 weeks, he will not be allowed to take his pension worth $500,000,00 and immediately put it into an IRA without your first giving WRITTEN CONSENT (notarized signature) waiving your spousal right to a "joint and survivor" form of pension pay-out. If you give such consent, the Plan administrator will then be permitted (and required) to follow his directions regarding a rollover of the present actuarial value of his pension (assuming this is a defined benefit plan as distinguished from a defined contribution plan) to an IRA as he designates.

Once rolled over to his IRA, you would have no surviving spouse rights to his IRA if he died while married to your UNLESS you were his designated IRA beneficiary. In the event of a divorce, the money in his IRA, to the extent acquired during the marriage, would be considered under Kansas law as a marital property asset subject to equitable division incident to dissolution of marriage.

A large pare of my law practice involves drafting and processing of QDROs, so I have a little bit of knowledge about how these things work.
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Customer: replied 5 years ago.
I am only a "survivor benificiary". Was told by financial advisor that I could not be a joint owner (They told me that an IRA can only have one name as the owner. So I could not be a joint owner) They had me sign a "notorized document" to that effect. I didn't want to say "but what if we were ever to divorce?" Additionally, you say "to the extent we were married". Would that be, let's say, that I would be entiled too only 10 years worth of his IRA accumulated during the marriage?
Oh! You originally spoke about a QDRO, so my earlier information was based on the assumption that what you were awarded in the divorce judgment from Husband # XXXXX was a defined benefit pension plan or a defined contribution retirement plan. Now you tell me that it was an IRA account.

What needs to be understood is that the division of an IRA account incident to dissolution of marriage does not involve the use of a QDRO. QDROs are needed to implement a divorce court's division and award of an employer-sponsored plan. An IRA is an individual plan that does not involving an employer, and it thus not subject to the ERISA laws.

Division of an IRA incident to divorce generally does not require a QDRO. The language of the divorce judgment itself is generally all that is needed. (Although some IRA custodians nonetheless insist
on receiving a separate court order that they erroneously refer to as a QDRO even though that is not what it would be.) CLICK HERE for more information about division of an IRA incident to dissolution of marriage.

What your financial advisor told you about your not being able to be a joint owner of an IRA is true. By its very title, an IRA is an INDIVIDUAL Retirement Account. The individual IRA account owner has the right to designate anybody the IRA account owner wants as the beneficiary to received the remaining IRA balance upon death of the IRA account owner. However, in the event of a divorce, the divorce court may order that the IRA account be divided between the divorcing spouses and that all or a portion of the owner's IRA be transferred to the other spouse. Such a transfer would be a tax-free transfer under 26 USC § 408.

And, of course, I have no idea of what you are talking about when you say "They had me sign a "notarized document" to that effect." WHO is "they"? A notarized document saying that you cannot be a joint owner of an IRA account?? That does not make any sense. As a matter of law, IRA accounts cannot be jointly owner. A "notarized document to that effect" would be wholly meaningless. Trying to make heads or tales out of this via the description you are providing is akin to a doctor trying to evaluate an X-ray based on the patient giving the doctor a description of the X-ray without the doctor being able to directly see the x-ray first hand.

And whatever it was that you signed with notarized signature, did it pertain to the anticipated rollover of current husband's pension or retirement plan when he retires 4 weeks from now? Or did pertain to the IRA account into which the pension/retirement plan money is supposed to be transferred?

Also, as to money in husband's IRA account in the event of a divorce -- If the money in husband's IRA was derived from a pension or retirement interest that he had before his marriage to you, and a divorce were to now occur, only the portion of the funds in the IRA than are attributable to post-marriage acquisition of the retirement account from which the IRA money cam would be subject to division incident to divorce. In other words, money that he can establish as "pre-marital" would be excluded from being treated as an asset acquired during his marriage to you.

So if he acquired a retirement plan interest over a period of 20 years, but you were married to him for only the last 10 of those 20 years, you would share in only the portion of the retirement benefit attributable to the last 10 years, since the portion of the retirement benefit entitlement acquired during the first 10 years would be considered as premarital property (thus belonging entirely to him). And if he then rolled over the retirement interest into an IRA when he retired (doing so with your written permissioh if he did it while married to you), and he and you later divorced, you would not have a valid claim to the portion of the IRA account that is attributable to his retirement money that was acquired prior to his getting married to you..

So, in sum, yes, you would be entitled to only 10 years worth of his IRA accumulated during the marriage.

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