[author: Matthew Lundy - Esquire]

Although we pride ourselves on preparing QDROs at a very fast pace, often the hardest thing to tell a potential client and/or referring attorney is that there is no guarantee as to when the QDRO process will be complete. This is especially true when considering that many online services promise an end to the “QDRO process” that is untenable (as they usually measure the end of that process by the amount of time it takes to draft the proposed document or get a pre-approval, which is only the beginning of the process). There are over 100,000 retirement plans in this country, some with formal QDRO procedures, and some without such procedures. It is common for a big company to change third party QDRO administrators every other year, thereby completely changing the process for getting a QDRO done with that company. It is also common for plans to impose many non-legal, quirky administrative hoops for the order and/or the parties to jump through to get an order signed (such a providing phone numbers in the court order, phrasing assignments in a particular manner, and/or requiring authorizations to be signed by the participant for the plan to conduct a review). This makes predicting the actual end point of the process (i.e. the formal approval of the order by the plan) very difficult, and may require a lot of cooperation and flexibility post-judgment. In other words, it may require ongoing involvement of the parties’ attorneys if the parties are not cooperative.

This presents a challenge to family law professionals: how are you supposed to give your client a realistic expectation of when they will receive their money, and if you cannot do that, what can you do to protect their interests?

1) Do not make timing guarantees for when payouts will be made.

2) Have your client direct questions about specific plans to either the plan or to us. If we can answer those questions, we will, and if not, we will refer them to the plan.

3) If time is truly of the essence, and your client needs the payout to live or to move out of the marital home, consider a payout from an asset other than a retirement plan, which will be payable on a more certain timeline (we know this might reduce reliance on QDROs and on our firm, but that is OK with us, as long as you and your client are happy), or short-term support to bridge the gap until the QDRO pays out.

4) If the plan is in pay status, consider having the participant make direct payments, net of taxes, until the QDRO goes into effect.

5) Make sure settlement agreement language is clear and unambiguous.

6) Send a copy of the final judgment and settlement agreement to the plan to put them on notice of the pending adverse interest of the non-participant.

7) Make sure the QDRO process is started as early as possible.

While our firm does guarantee a very quick turnaround for the preparation of QDROs and other necessary documents (three (3) business days or less), QDROs must go through approval by the parties, the judge, the clerk of court (which in many counties can take weeks or months to register), and then through the plan (who may receive the order for both pre- and post-approval). This part of the process in difficult to predict, even with the simplest of plans. So be cautious when advising clients on timing issues related to QDROs.