After The Divorce – Retirement Pay

by Sheryll Bonilla, Esq.

It comes as a surprise to many an ex-wife that the divorce decree does not automatically result in her getting her share of her ex-husband’s retirement pay.

To get her share, a wife has to have a Qualified Domestic Relations Order (QDRO) signed by the court, after the draft of the order is first approved by the retirement plan administrator.

I usually recommend to divorce clients that the QDRO is signed at the same time as the decree, and here’s why. Couples at that point want to get the divorce over with and are willing to sign all the documents needed to make that divorce happen.

There’s also clarifications that the Plan Administrator might need, and the couple’s lawyers can get those clarifications done while the divorce negotiations are still in process. Signing the QDRO is part of tying up all loose ends for the marital split.

Remember, if your soon-to-be ex-husband is the kind who will give you a hard time, imagine how difficult it will be when you’re trying to chase down money and he has no incentive to cooperate, like it would be if he was signing the decree at the same time.

What usually happens, though, is that couples think it’s automatic so they don’t do anything until it’s time to collect and no money comes. Then the ex-wife finds out that the ex-husband is collecting but she’s not getting her share.

Try asking an ex-husband to hand over the ex-wife’s share of the money he’s getting and you can see the conflict start when he says no. If he’s been collecting for a while, that “no” is going to be even a bigger “no” and the wife will be even more frustrated at the amount of money she’s losing.

Let it go too long, and that can be tens of thousands of dollars.  At that point, not only does the ex-wife have the cost of getting the QDRO prepared, she also has to incur the cost of going back to court to enforce the decree to make the husband pay to her the share she was supposed to get and he won’t give to her – that just makes her legal fees higher and needlessly so.

To make the situation worse, some Plan Administrators might require the ex-husband’s new wife (or subsequent ex-wife) to sign off on the QDRO. What a hassle, right?

So – if you’re going through a divorce, get the QDRO prepared so that all remaining tasks are completed to implement the decree provisions.

Why isn’t this automatic with the decree you ask? Because a divorce decree only concerns the husband and wife. The retirement plan is not part of the divorce, so the Plan Administrator has no legal obligation to do what the decree says. The QDRO is the order that requires the Plan Administrator divide the retirement pay per the decree.

If the husband has more than one retirement plan, then each one has to have its own QDRO. For example, many federal employees and military service members have both a retirement benefit and an TSP.

You’ll need a separate order for each.  Construction workers may have belonged to different unions – each needs a separate order. Some union members have both a pension and an annuity – each needs a separate order.

Some people work for different employers throughout their lives, like working for the government after retiring from the military and then also working for a private company – each retirement plan needs a separate order.

These orders all have to be signed by the court.

That’s too much hassle you say. How would you feel if you find out your ex-husband retired in his forties shortly after the divorce – twenty years earlier than you expected – and has been collecting for twenty years without giving you your share? Couldn’t you have used those tens of thousands of dollars?

If you go to court to get enforcement, isn’t he going to tell the court he already spent your half of the money and can’t afford to pay it to you? You bet he will.  You could lose your share on that alone. So, get the QDRO as soon after the divorce as possible to avoid significant losses in retirement pay that you can use for your own living expenses.

In Hawaii decrees, retirement pay is usually divided by the Linson formula. An ex-wife gets one-half of her husband’s monthly pay, based on the time he spent working for that employer and the overlap of that job with the marriage.

Since many wives see their standard of living fall dramatically without their husband’s income, getting that half share of a husband’s retirement benefits often goes a long way in helping pay for living expenses.

One wife said her half of her ex-husband’s retirement pay would be only about $300 a month. That still helps, I told her – $300 might pay her utilities bills each month, and that frees up the money for other needs like car insurance or prescriptions or other bills.

Some private companies allow a wife to start receiving her share right away – and if your children are still young, that extra bit can help a lot with costs, even if it just takes care of the electric and phone bills. For the federal government the wife can’t get her share until the husband starts getting his share. Some plans allow the wife to name a beneficiary in case the wife dies before collecting, and some plans don’t.

Enforcement is not always easy and that’s why it’s better to have the QDROs ready for signing around the same time the decree is being signed. Sometimes enforcement can be a knockdown, drag out, expensive fight just like the divorce. It also happens that the husbands die before the QDRO can be done, so he can’t sign the order.

Cut your losses and minimize the hassle by getting the QDROs ready to be signed along with the decree. The sooner you get your share of your husband’s retirement benefits, the easier it is on you financially.

This article is for informational purposes only and is not to be constructed as offering legal advice. Please consult an attorney for your individual situation. The author is not responsible for a reader’s reliance on the information contained here.