When New Hampshire couples divorce, they may not factor in all the financial implications of this decision while working through difficult family or emotional aspects of the split. Accumulated wealth during a marriage becomes commingled over time, but after the division of marital property, each spouse will walk away with much less.
A couple’s greatest source of wealth is often their retirement savings. If one spouse has an employer-sponsored retirement plan, the other spouse has a legal right to part of the balance. It is essential to find ways to protect your interests when your spouse’s employer pays out benefits that may belong to you, as this may affect your future as well as future child support or alimony payments.
What is a QDRO?
A Qualified Domestic Relations Order (QDRO) is a court order or judgement that directs how a retirement plan will pay for child support, alimony, or spousal property rights to a former spouse or dependent child. Under federal law, a QDRO applies only to IRS tax-qualified plans that are covered by the Employee Retirement Income Security Act (ERISA), not government or military pensions.
A Domestic Relations Order (DRO) only becomes Qualified when both the court and the plan’s plan administrator approve it. The DRO will follow state domestic relations law and may include provisions for child support and alimony payments. To qualify as a QRDO under ERISA, it must have specific information, including:
- Name and last known address of participant and alternate payee(s)
- The name of the plan that the order specifies
- Percentage of benefit to the alternate payee
- Number of payments or time period that the order specifies
The timing of the payments will depend on the plan, and a defined benefit plan such as a company pension plan will start monthly payments at the payee’s retirement age.
QDROs in New Hampshire
New Hampshire is an equitable division state, meaning that in a divorce proceeding, the judge will determine the fair, but not necessarily equal, division of marital property, which will likely include retirement plans such as Roth IRAs and 401(k)s. But the timing of the payout, the amount in the account and when the divorce occurs, can weaken a court order if it is not enforced by a QDRO.
In New Hampshire, a court order may award part of a participant’s retirement benefit to their ex-spouse if it meets the standards for a QDRO, and when it has been submitted to the New Hampshire Retirement System.
