QDRO -Qualified Domestic Relations Order - Dividing Retirement Benefits During Divorce in PA
A Qualified Domestic Relations Order (QDRO) is a court order that enables retirement plan companies to divide retirement benefits in a divorce. In essence, a QDRO sets forth the rights of each of the spouses and the value of their retirement benefits and includes specific instructions
What plan is subject to division?Only "marital" retirement benefits (benefits acquired during the marriage) are subject to division between spouses in a divorce; divorcing spouses usually get to keep their "separate" property benefits (benefits acquired before marriage, after separation, or by gift or inheritance). If the plan was created before marriage, it will likely be "co-mingled," which means it has both separate and marital elements (the marital element will be the increase in value and post marital contributions - if any - during the marriage). If a plan was created during marriage (from the date of marriage through the date of separation), the entire plan is generally included in the marital estate and subject to division. But, if contributions were made after separation, the plan is co-mingled, and the post-separation contributions must be kept separate from the marital portion during division. When a plan was created after the date of separation, it's generally considered non-marital and not included in the marital estate (unless the employee spouse used marital funds to create or fund the account after separation).
How is the division handled?The division of retirement benefits is unpredictable because courts in Pennsylvania divide property including pension plans using the "equitable distribution" method, which depends on numerous factors, including the length of the marriage and each spouse's age, health, education, and income.