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QDRO - Who is Responsible? What Happens if No Date is Given?

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needhelp22

Junior Member
What is the name of your state (only U.S. law)? California

I was separated on November 1, 2005 and my divorce was final around
September of 2006. The problem is that the QDRO was not completed at the
time of our divorce. I'm not sure who was responsible for doing it, but my
ex-husband ignored it for a while & then I tried in vain to do the process
myself and finally turned it over to someone who just finished drafting one
for us and has gotten it approved.

Now my ex refuses to sign it because the "division date" is the date of our
divorce. He says he doesn't want to be responsible for paying me the difference
since the value of the 401k account has gone down dramatically since this date.

There was no date specified in our divorce decree as to the date that we should
split the funds. It just says that we split it 50/50.

So am I out the difference since it doesn't specify a date that we should split the
401k funds? If there is no date specified in the divorce decree, is there a date that
is legally assumed?

Also, am I in any way responsible for not getting the QDRO done? If so, what are
the legal ramifications of this? I have always been under the impression that it was his responsibility to do this since it was his retirement savings, but I am wondering now if I was correct to assume so.

Thanks in advance for your help.
 


Your ex doesn't understand how 401k's are divided. If he is agreeable to using the current date as the division date, it is actually to your advantage to do so. (Assuming there have been no withdrawals.)
 

mistoffolees

Senior Member
Your ex doesn't understand how 401k's are divided. If he is agreeable to using the current date as the division date, it is actually to your advantage to do so. (Assuming there have been no withdrawals.)
That's not true. It depends very much on how the decree is worded. OP needs to say exactly what the divorce decree states about division of the 401K.

If the decree says that she gets 50% and there have been no additions or withdrawals, then it doesn't matter. It's going to be 50% then or 50% now, but today's value will be the same.

If it says she gets 50% and he has continued to add to it, then obviously, the earlier date would be better for him since she would be entitled to 50% of the value at the time of divorce - BUT this is adjusted for changes in value of the entire portfolio if it's done right.

If, OTOH, the decree says that he has to give her $100,000 (or any dollar amount) out of the 401K, then he's going to get hurt because even if $100 K was 1/4 of the portfolio 2 years ago and is now 1/3 or 1/2, he still has to give up that amount. This is not uncommon - when ordered to pay a fixed amount, some people try to delay on the assumption that the total value will go up so ex will get a smaller percentage. They hope to benefit from the gains. But then if the value falls, they whine about the unfairness of the whole thing.

Bottom line for anyone else reading this is that a QDRO should be filed as soon as possible after the divorce because the longer you wait, the more complications there will be.

For the OP, tell us exactly what the decree says. If he's objecting to your wording, then take it to your attorney to have it written properly. If everything else is settled, it shouldn't be too expensive. If it's written up properly and follows the divorce decree exactly, your attorney should be able to file it without his approval. (In some cases, attorneys don't do QDROs, so ask him for a financial planner in your area who can do it).
 

Bali Hai

Senior Member
That's not true. It depends very much on how the decree is worded. OP needs to say exactly what the divorce decree states about division of the 401K.

If the decree says that she gets 50% and there have been no additions or withdrawals, then it doesn't matter. It's going to be 50% then or 50% now, but today's value will be the same.

If it says she gets 50% and he has continued to add to it, then obviously, the earlier date would be better for him since she would be entitled to 50% of the value at the time of divorce - BUT this is adjusted for changes in value of the entire portfolio if it's done right.

If, OTOH, the decree says that he has to give her $100,000 (or any dollar amount) out of the 401K, then he's going to get hurt because even if $100 K was 1/4 of the portfolio 2 years ago and is now 1/3 or 1/2, he still has to give up that amount. This is not uncommon - when ordered to pay a fixed amount, some people try to delay on the assumption that the total value will go up so ex will get a smaller percentage. They hope to benefit from the gains. But then if the value falls, they whine about the unfairness of the whole thing.

The account owner will NEVER benefit from specifying a dollar amount even if the account has doubled since the cutoff date because rarely will the other spouses share not include earnings on their share.

The account owner will lose big time if a dollar amount is specified and the market does what it did the last two weeks.


Bottom line for anyone else reading this is that a QDRO should be filed as soon as possible after the divorce because the longer you wait, the more complications there will be.

For the OP, tell us exactly what the decree says. If he's objecting to your wording, then take it to your attorney to have it written properly. If everything else is settled, it shouldn't be too expensive. If it's written up properly and follows the divorce decree exactly, your attorney should be able to file it without his approval. (In some cases, attorneys don't do QDROs, so ask him for a financial planner in your area who can do it).
To those reading this, it is almost NEVER advantageous for the account owner to specifiy a fixed amount in your QDRO if it is invested in stocks. The QDRO will give that dollar amount if the market has tanked, and, will give that amount PLUS earnings if the other way around.

The best way to split, is to divide the shares on the date that your state statutes reconize as the legal cutoff date.

Ex: NYS reconizes the time of commencement (filing) of the divorce action. That way there is no quibbling about market swings or subsequent contributions by the owner. If done this way, the timing is not important.
 

mistoffolees

Senior Member
To those reading this, it is almost NEVER advantageous for the account owner to specifiy a fixed amount in your QDRO if it is invested in stocks.
That part is true. However, if the parties act quickly to process the QDRO and get it filed and the financial firm acts quickly, it can be done within days and it's not likely to matter much.

The QDRO will give that dollar amount if the market has tanked, and, will give that amount PLUS earnings if the other way around.
That is not correct. If the QDRO says that you have to transfer $100,000 to another account, that's the amount you transfer - no matter whether the account has grown or shrunk.

The world is NOT as unfair as you think it is.
 

Bali Hai

Senior Member
That part is true. However, if the parties act quickly to process the QDRO and get it filed and the financial firm acts quickly, it can be done within days and it's not likely to matter much.



That is not correct. If the QDRO says that you have to transfer $100,000 to another account, that's the amount you transfer - no matter whether the account has grown or shrunk.

I am correct. You just said the same thing I did but left out the earnings on the $100k.

Why on earth would anyone want to split the account using a dollar amount and not expect earnings on their portion from the date of the divison to the actual split??

Why on earth would anyone want to split the account using a dollar amount when the next day the account is worth half its value??

Just because you split your account incorrectly, doesn't mean everyone else should do the same.


The world is NOT as unfair as you think it is.
The judicial system is absolutely unfair to men as I think it is and probably even more so.
 

mistoffolees

Senior Member
The judicial system is absolutely unfair to men as I think it is and probably even more so.
It would really help if you'd learn to quote correctly. For as long as you've been posting here, you'd think you'd have figured it out.

As for the rest, what I stated is correct. I'm not advocating that anyone use any particular method to split it, but recognize that there ARE circumstances when a dollar amount is better for the parties. There are times when a dollar amount might make sense - if, for example, the parties decide to offset cash accounts with retirement (which I do not recommend unless they're very careful to correct for the tax differences). In that case, they might prefer to set a dollar figure.

The only thing I advocate wrt QDRO is that it should be filed as soon as humanly possible so that any discrepancies are minimized. That is a true statement - no matter how the parties choose to split the account.
 

Bali Hai

Senior Member
It would really help if you'd learn to quote correctly. For as long as you've been posting here, you'd think you'd have figured it out.

I quote the way I quote and will continue to quote that way!! And you can quote me on that.

As for the rest, what I stated is correct. I'm not advocating that anyone use any particular method to split it, but recognize that there ARE circumstances when a dollar amount is better for the parties. There are times when a dollar amount might make sense - if, for example, the parties decide to offset cash accounts with retirement (which I do not recommend unless they're very careful to correct for the tax differences). In that case, they might prefer to set a dollar figure.

The only thing I advocate wrt QDRO is that it should be filed as soon as humanly possible so that any discrepancies are minimized. That is a true statement - no matter how the parties choose to split the account.
I don't recommend offsetting cash accounts with retirement no matter how carefully the tax issues are corrected for. That's just plain non-sense!

There is a retirement account and a cash account. Keep the accounts separate when dividing them. Plain and simple. If someone wants cash in hand now vs. their share of the retirement account, well then that is just too damn bad!!
 

mistoffolees

Senior Member
I don't recommend offsetting cash accounts with retirement no matter how carefully the tax issues are corrected for. That's just plain non-sense!

There is a retirement account and a cash account. Keep the accounts separate when dividing them. Plain and simple. If someone wants cash in hand now vs. their share of the retirement account, well then that is just too damn bad!!
I agree - which is why I usually recommend against it.

Perhaps you should take it up with LdiJ. He insists that as a professional tax accountant there's nothing wrong with offsetting pre-tax and after-tax assets at 1:1.
 

needhelp22

Junior Member
That's not true. It depends very much on how the decree is worded. OP needs to say exactly what the divorce decree states about division of the 401K.

If the decree says that she gets 50% and there have been no additions or withdrawals, then it doesn't matter. It's going to be 50% then or 50% now, but today's value will be the same.

If it says she gets 50% and he has continued to add to it, then obviously, the earlier date would be better for him since she would be entitled to 50% of the value at the time of divorce - BUT this is adjusted for changes in value of the entire portfolio if it's done right.

If, OTOH, the decree says that he has to give her $100,000 (or any dollar amount) out of the 401K, then he's going to get hurt because even if $100 K was 1/4 of the portfolio 2 years ago and is now 1/3 or 1/2, he still has to give up that amount. This is not uncommon - when ordered to pay a fixed amount, some people try to delay on the assumption that the total value will go up so ex will get a smaller percentage. They hope to benefit from the gains. But then if the value falls, they whine about the unfairness of the whole thing.

Bottom line for anyone else reading this is that a QDRO should be filed as soon as possible after the divorce because the longer you wait, the more complications there will be.

For the OP, tell us exactly what the decree says. If he's objecting to your wording, then take it to your attorney to have it written properly. If everything else is settled, it shouldn't be too expensive. If it's written up properly and follows the divorce decree exactly, your attorney should be able to file it without his approval. (In some cases, attorneys don't do QDROs, so ask him for a financial planner in your area who can do it).
Sorry for not being clear about the details. Here is the exact language of our divorce decree:
"The parties agree to divide all of their personal property, whether community, quasi community, or separate, as follows:

Husband transfers to Wife as her sole and separate property the following:
One-half IRA held with (company name), account number XXXXXXX"

There is no specific amount mentioned and also no specific date for division.
He has not made any additional contributions nor has he withdrawn any funds since
our divorce. He's not objecting to the wording - just the date of division.

The QDRO has already been written by a paralegal and has been approved
by the plan administrator. However, my ex is refusing to sign because the QDRO states
a division date of around 2 years ago - when the plan had a lot more money it in
(a date near our divorce when we divided up all of our other assets).

Instead, he wants to use the present day as our division date. That means I get
quite a bit less, but if it was his sole responsibility to do the QDRO then I don't
think I should have to accept less. However, if it is indeed partly my responsibility
for waiting so long, then I guess I don't have much of a case, right?

Thanks so much for all of your advice.
 

Ronin

Member
The responsibility to take care of this should have been yours and your divorce attorneys, since you had the vested interest in that money. Your attorney should have ensured the decree was properly worded and promptly filed the QDRO. The plan administrator would have complied with the decree and disbursed the funds in the manner specified.

My ex's lawyer was all over my pension and 401K after the decree was signed and I did not do a thing except see a change in my balance.

The QDRO has already been written by a paralegal and has been approved by the plan administrator. However, my ex is refusing to sign...
If I was in your ex's position I sure as heck would not sign anything at this point under the terms you suggest. You may have a bit more of a mess than a paralegal simply writing your QDRO can do for you. If you cannot come to a mutually agreeable solution with your ex, and the plan administrator won't take action without his signature, you may need to go back to court to clarify and enforce this part of the decree.
 
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mistoffolees

Senior Member
Sorry for not being clear about the details. Here is the exact language of our divorce decree:
"The parties agree to divide all of their personal property, whether community, quasi community, or separate, as follows:

Husband transfers to Wife as her sole and separate property the following:
One-half IRA held with (company name), account number XXXXXXX"

There is no specific amount mentioned and also no specific date for division.
He has not made any additional contributions nor has he withdrawn any funds since
our divorce. He's not objecting to the wording - just the date of division.

The QDRO has already been written by a paralegal and has been approved
by the plan administrator. However, my ex is refusing to sign because the QDRO states
a division date of around 2 years ago - when the plan had a lot more money it in
(a date near our divorce when we divided up all of our other assets).

Instead, he wants to use the present day as our division date. That means I get
quite a bit less, but if it was his sole responsibility to do the QDRO then I don't
think I should have to accept less. However, if it is indeed partly my responsibility
for waiting so long, then I guess I don't have much of a case, right?

Thanks so much for all of your advice.
I believe you're mistaken. If the decree says you get half, then you get half. If you had filed 2 years ago the half would have been larger, but it would have shrunk to the same level that it is now (assuming that you didn't change the investments.

1/2 means 1/2. Trying to take 1/2 of a 2 year old value today is wrong.

I'll bet if the stock had doubled in value, you'd be looking for half of today's value rather than half of old value, right?
 
Instead, he wants to use the present day as our division date. That means I get quite a bit less,
You get quite a bit less regardless, because there is quite a bit less.

If you use the current date for the division, you get half of the present value.

If you use the past date for the division, you get less than half of the present value, because any contributions made past the division date will count solely toward your ex.
 

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