Top 4 Reasons to Divide Retirement Benefits in Your Divorce Correctly

Navigating a divorce involves numerous financial considerations, but one of the most critical is the correct division of retirement benefits. Ensuring that these funds are properly allocated through a Qualified Domestic Relations Order (QDRO) depends on what is written in your divorce judgment or decree. The QDRO effectuates the retirement benefits awarded in the divorce documents.

Here are the top four reasons why dividing retirement benefits accurately in your divorce documents is critical.

1) Prevents Loss of Entitlements: Loss of benefits is a widespread problem when divorce language fails to correctly divide retirement benefits. If the participant dies and/or remarries before the divorce language is fixed and a QDRO is completed, the ex-spouse can lose some or all rights to his or her marital share of the benefit. Protective and correctly written retirement benefit division language ensures that the retirement benefits are properly allocated according to the divorce decree, preventing any future post-divorce disputes or losses.

2) Clarifies Ownership and Rights: Making sure all retirement benefits for both parties are identified and properly divided in the divorce judgment eliminates confusion over ownership and potential loss of rights to the benefits. This clarity is essential as it ensures both parties understand their entitlements and responsibilities, avoiding potential legal disputes.

3) Secures Survivor Benefits: Including specific provisions for survivor benefits in the divorce judgment is vital. Without these provisions, the former spouse may lose their right to the benefits if the participant dies or retires, which could lead to significant financial hardship.

4) Enables Timely Payouts: Once the divorce documents are completed correctly, it is easy to then draft and finalize any needed QDROs quickly. Best case scenario is that both the divorce judgment and QDROs are signed by the parties concurrently. This ensures timely payouts and any issues can be handled immediately after divorce between the parties and the plan.

The reason we are so strident about making sure divorce judgment language is done properly is because of the following common situation:

Situation 1) Kim is a participant in her private company’s pension plan. Kim and Joel get divorced and their divorce judgment says Joel “shall receive 50% of the community property portion of Kim’s pension, to be divided by QDRO.” This type of language is very common in divorce judgments and decrees, including ones prepared by family law attorneys! The parties were waiting to get the QDRO done “down the road” when Kim is closer to retirement age.


Situation 2) Kim remarries Tom after divorce and then Kim dies. The plan can only pay a survivor benefit to Tom as Kim’s “surviving spouse.” Joel is no longer a “surviving spouse” since the parties are divorced and his rights to survivor benefits were not stated in the divorce judgment. As a result of faulty judgment language, Joel lost his rights to the pension benefit.

This situation would not have occurred if the divorce judgment language had specifically awarded Joel his right to receive survivor benefits in the pension. Joel’s rights to the survivor benefits would have been secured. A QDRO could then be entered in family law court after Kim’s death so that Joel could receive his marital interest in the survivor benefits. Carmona v. Carmona (9 Cir 2010) 603 F.3d 1041, Hopkins v. AT&T Global Information Solutions Co. (4 Cir 1997) 105 F.3d 153

The QDRO implements the orders in the divorce judgment and facilitates the ability for the plan to pay benefits directly to the former spouse. These are separate documents. You can prepare the QDRO at any time but if possible it is best to draft the QDRO before you finalize the divorce judgment language to (1) protect against any issues that may arise before the divorce is final and (2) protect the former spouse’s interest in the plan. The former spouse’s interest in the plan is not secured until the QDRO is completed.

Dividing retirement benefits correctly in a divorce document is more than just a procedural necessity; it is a crucial step in protecting your financial well-being and legal rights post-divorce. By addressing these issues promptly and precisely, you can avoid future disputes, secure your financial future, and streamline the divorce process. Remember, thorough planning and understanding of your entitlements now can prevent unnecessary stress and financial strain in the future.

Next steps: Obtain case and plan specific judgment language from QDROCounsel. Also do any QDROs now even if the payout is some time in the future. People falsely think they should wait to do the QDRO if the payout from the plan will occur in the future. Don’t fall into that trap! If the participant dies or retires before the QDRO is done, the former spouse will likely lose the benefit!


Click here to purchase case and plan specific judgment language or for a QDRO.

  • Editorial Team
  • August 27, 2024
  • 12:22 pm
  • 0 comments

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