Rather than relying upon your former spouse to pay you a share of a future retirement, your best protection is a court order that provides for the retirement or pension plan administrator to pay the money directly to you. This type of court order is often referred to as a Qualified Domestic Relations Order (QDRO) or, in the case of federal retirement plans, a Court Order Acceptable for Processing (COAP). Such orders help ensure that a nonemployee spouse receives his or her share directly from the employee spouse’s plan.
Obtaining a QDRO or COAP is a critical step in the divorce process. They can be complex documents, and a number of steps are required to reduce future concerns about enforcement and fully protect your rights. These court orders must comply with numerous technical rules and be approved by the plan administrator, which is often located outside of North Carolina. Whenever possible, court orders dividing retirement plans should be entered at the same time as the decree of dissolution.
For some government or nonqualifying plans (plans not subject to QDRO), you must find ways (other than a QDRO) to receive the value you are entitled to. When dividing up other assets, a settlement or judgment can take into account the retirement that cannot be split. Your spouse may agree or be ordered to transfer a portion of the funds once he or she actually receives them from the plan, but there can be complicated tax issues with this method.
Eric C. Trosch
NC Board Certified Family Law Specialist