Why do I need a QDRO?

Federal law states that a employer sponsored retirement benefit can only be divided between former spouses if there is a QDRO.

ERISA and Non Qualified Plans

Most employees' employer-sponsored retirement plans are regulated by the Employee Retirement Income Security Act (ERISA). ERISA is a federal law that determines the minimum standards for most voluntarily established private employer-sponsored plans. This includes funding, vesting, and benefits coverage.

Some employers offer supplemental retirement benefits which go beyond the established limits for qualified plans. These are known as non-qualified supplemental retirement plans.

Non-qualified retiement plans include:

  • Supplemental Executive Retirement Plans (SERPs)
  • Cash Value Life Insurance Policies
  • Group Carve-Out Plans
  • Split-Dollar Life Insurance Plans

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Military Retirement Systems

The Uniformed Services Former Spouses’ Protection Act (USFSPA) grants a court the authority to treat disposable retired pay as marital property that qualifies for equitable distribution in a divorce. A Qualifying Court Order (equivalent of a QDRO) is necessary to properly complete this process.

Active duty military service members qualify for "Regular Retirement" once they have completed 20 years of active service in the military. There are some cases when members are eligible for retirement under the Temporary Early Retirement Authority (TERA). To qualify for this they must have completed at least 15 years of active service.

Generally, active-duty members are covered by one of several different retirement plans:

  • Final Pay Plan
  • High Three Plan
  • REDUX Plan
  • Blended Plan

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Federal Retirement Systems

There are distinct differences between federal government employee pensions and private/local government employee pensions. During a divorce, dividing these benefits requires an understanding of these differences when when negotiating a federal pension division.

Federal Government retirement plans are not covered under The Employee Retirement Income Security Act of 1974 (ERISA). Therefore, these plans are not subject to a Qualified Domestic Relations Order (QDRO). However, a court order similar to a QDRO, called a Court Order Acceptable for Processing (COAP) is used to divide certain federal employee retirement benefits.

Federal employee retirement plans generally fall under one of these categories:

  • Federal Employees Retirement System (FERS)
  • Civil Service Retirement System (CSRS)
  • Thrift Savings Plan (TSP)

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