In most cases, a pension one has worked for may not be seized or garnished by the state in order to cover a person’s debts. However, there is one exception, and that is family support. If you are in a position where you are ordered to pay spousal or child support, your pension or other retirement accounts may be reached via a document called a Qualified Domestic Relations Order (QDRO), in some cases referred to as a Qualified Illinois Domestic Relations Order (QILDRO).
QDROs are the singular exception to a provision in the Employment Retirement Income Security Act (ERISA) that states that retirement interests cannot be divided or assigned. A QDRO creates an “alternate payee,” which means a second person who may be entitled to receive all or some of your retirement plan proceeds. In addition to creating an alternate payee, a QDRO must contain certain provisions, and not contain certain provisions. If the document contains information it should not, it will not be ‘qualified’ as a valid order.
Under ERISA, a qualified domestic relations order must contain the name and last known address of both the plan participant and the alternate payee. It must also contain the relevant plan information, such as the name of the plan, the amount to be paid to the alternate payee and how many payments will be made. This information may be altered later if necessary. The order must also not contain provisions granting increased benefits to the alternate payee (that is, more benefits than the order should entitle them to), nor should it dispose of assets that have already been spoken for in a previous QDRO.
QDROs are most commonly seen during asset division in divorce proceedings, though it is very possible to require one outside of such a situation. During a divorce, however, ERISA-governed retirement plans can be objects of discussion, because it is possible to have a plan qualify as both marital and non-marital property. In Illinois, some of these disputes can be negated, simply because the Illinois Marriage and Defense of Marriage Act (IMDMA) states clearly that pension plans, including ERISA funds, are presumed to be marital property, so if a plan has a non-marital element, it must be proven.
It is also important to keep in mind that while a court may be the one to accept a QDRO, the final determination as to whether an order is a “qualified” domestic relations order under ERISA lies exclusively with the retirement plan’s administrator. It is the “view of the Department of Labor” that a state court does not have jurisdiction to definitively hold that an order qualifies as a QDRO if the plan administrator disagrees. If it becomes necessary to appeal to a higher authority as to whether an order constitutes a QDRO, jurisdiction lies in federal court.
During a divorce, the aim of both parties is generally to conclude their business equitably, with all due speed. Being bogged down by your QDRO and ERISA concerns runs counter to both those goals, and enlisting an experienced legal professional can help get you through the debate with a satisfactory result for both you and your soon-to-be ex-spouse. Contact an Illinois ERISA attorney at the firm of Bartolic Law today; we are ready, willing and able to assist you with your case.