QDRO and Retirement Accounts in New Mexico

 

QDRO and Retirement Accounts in New Mexico are an essential part of the divorce process.   New Mexico is a community property state.  This means that every asset and debt accumulated during the marriage are divided 50-50 with divorce.

Retirement accounts are community property.  This means that under NM law, retirement benefits accumulated during the marriage will be split 50-50 upon divorce.

 

WHAT IS A QDRO IN NEW MEXICO?

 

A Qualified Domestic Relations Order (QDRO) is a court order that divides retirement plans between divorcing spouses.  There are a handful of retirement plans that must be divided upon divorce.  The QDRO includes necessary language that enables the retirement plan to be divided between divorcing spouses.

The QDRO is a separate and distinct order. The QDRO cannot be contained in the Martial Settlement Agreement or Final Decree.  A settlement agreement or Martial Settlement Agreement usually outlines the specific terms for the QDRO.  However, the QDRO provides the retirement plan with the necessary information and language to divide the retirement account between the divorcing spouses.

 

WHY IS A QDRO NECESSARY?

 

A QDRO is an order that provides the financial institution or plan administrator with necessary information to divide the retirement account.  The plan administrator needs the QDRO to divide the retirement account according to the Marital Settlement Agreement.

Let’s say that your ex worked for the State of New Mexico.  Possibly your ex worked as a teacher, police officer, correction’s officer, for UNM, or anywhere that accumulated a state pension under PERA.  The State of New Mexico needs the appropriate QDRO to divide the retirement account between the two spouses.

 

DO ALL RETIREMENT ACCOUNTS REQUIRE A QDRO?

 

Yes.  All retirement accounts require a QDRO to divide the account.  A QDRO must be provided to the plan administrator to properly divide the retirement account.  Most retirement accounts have specific requirements about the QDRO’s structure and content.

 

WHAT ARE THE TYPES OF RETIREMENT ACCOUNTS FOR QDROS IN NEW MEXICO?

 

There are two types of retirement accounts – Defined Benefit Plan and Defined Contribution Plan.

 

Defined Benefit Plan:

A defined benefit plan is commonly called a pension.  This plan does not have a dollar value until you retire.  Usually, a monthly dollar value is established once you retire.  At the point of retirement, a monthly value is assigned to the plan that entitles you to a monthly payment.

 

Defined Contribution Plan:

A defined contribution plan is a plan that the employee and employer contribute towards.  Common examples include 401(k), 403(b), or Thrift Saving Plan.  This plan usually grows over time.  This plan is an investment account with a specific and identifiable value.

IS THERE A DIFFERENCE BETWEEN A QDRO FOR A PENSION AND 401(K)? 

 

Each QDRO is unique and depends on the plan administrator’s unique requirements that are based on the plan’s description.  Each retirement account contains a plan description that establishes the plan’s terms.  Every QDRO must address the plan description and requirements.

No two plans are alike.  Because of the differences between each plan’s requirements, every QDRO is different. With that said, many of the plans have similar requirements and request the same information

 

HOW LONG DOES IT TAKE TO PREPARE A QDRO IN NEW MEXICO — QDRO AND RETIREMENT ACCOUNTS IN NEW MEXICO

 

The QDRO process usually takes several months, from start to finish.  The length of time depends on the following:

• The complexity of the retirement plan;
• The level of specific information that is necessary; and
• Whether your former spouse is hostile or cooperating with the process;

 

WHAT ARE THE COMMON REASONS THAT A QDRO GETS REJECTED? 

 

Some of the common reasons for a QDRO being rejected include:

• More information is needed;
• Incorrect disbursement language;
• Not approved by plan administrator;
• Incorrect name(s) or identifying information;
• Specific language required by plan administrator;
• Inconsistent or contradictory statements or requests; or
• Requesting something that isn’t possible under the plan.

 

WHAT INFORMATION DOES MY RETIREMENT ACCOUNT REQUIRE FOR A QDRO?

 

The information necessary to complete the QDRO that divides your retirement account depends on the company that manages the retirement plan.  The company that your retirement plan is through usually has the necessary language to complete the QDRO.

Some retirement plans have very specific requirements and require a great deal of information to complete the process.

Other retirement plans may only require a general guideline with specific language requirements.  The information that is needed ultimately depends on the retirement account’s plan administrator.

 

IS MY MARITAL SETTLEMENT AGREEMENT/FINAL DECREE A QDRO?

 

No.  A divorce decree usually lacks necessary information and specific language requirements that are needed to divide the retirement account.  The retirement accounts plan administrator determines what language is necessary to complete the appropriate QDRO that divides the retirement account.

 

DOES THE QDRO DETERMINE HOW MUCH OF MY RETIREMENT MY EX WILL GET?

 

No.  Your settlement agreement or Marital Settlement Agreement determines what percentage of your retirement account your ex will receive.  The QDRO provides the plan administrator with all the information and language that is necessary to divide the account.

 

WHAT ARE THE DIFFERENT FORMS OF PAYMENT FOR PERA RETIREMENT ACCOUNTS IN NEW MEXICO?

 

New Mexico PERA retirements have four options: Payment A, B, C, or D.   These forms of payment determine if benefits end when the member/employee dies.

Payment A

• Payment A has no survivor beneficiary. All benefits end when the member/employee dies.  Payment A results in the maximum monthly pension that can be paid under any of the forms of payment.
• All pension payments cease upon the death of the member.

Payment B

• Provides survivor pensions to one person designated by the member.
• The survivor beneficiary receives a monthly pension of the same amount as the member received during the member’s lifetime.
• Payment B is usually used for family members or children.

Payment C

• Provides survivor pensions to one person designated by the member.
• The survivor beneficiary’s monthly pension is 50% of the monthly amount paid to the member during the member’s lifetime.
• Payment C is usually used for an ex-spouse.

Payment D

• Provides for temporary survivor benefits for children.

 

WHAT STEPS ARE NEEDED TO COMPLETE THE QDRO PROCESS IN NEW MEXICO?

 

Every QDRO requires different information and language.  With that said the follow steps are usually necessary to complete the QDRO process:

1. Gather Information:

• • This step requires complete information about both parties, as required by the plan administrator to complete the QDRO.

2. Prepare the QDRO:

• • This step takes puts all the necessary information and language into the proper QDRO.

3. QDRO Approved by Other Side:

• • This step involves sending the QDRO to you spouse/spouse’s attorney for review and approval. Your ex should act reasonably and accept the QDRO, if it reflects your full agreement.

4. QDRO Approved by Plan Administrator:

• • Once approved by your ex, the QDRO is sent to the retirement account’s plan administrator for approval. At times, the plan may request changes to the QDRO’s language, for the reasons stated above.
  • Different plans require different language. This language must be included for the plan administrator to approve the QDRO.  Most QDRO edits involve minor changes that surround additional information being included for approval.

5. Assigned Judge Reviews and Signs QDRO:

• • Once approved by the other side and plan administrator, the QDRO must be signed by all parties. At that point the QDRO is submitted to the assigned judge to review and sign.

6. Get a Certified Copy of the QDRO:

• • Once your judge reviews and signs the QDRO you must get a certified copy of the QDRO. This certified copy is then sent to the plan administrator for final approval.
  • A certified copy of the QDRO has the original signature with seal of the court’s clerk.
  • A certified copy of the QDRO can be requested form the court’s clerk for a fee.
  • The certified copy is then sent to the plan administrator for final review, acceptance, and payment.

7. Plan Administrator Accepts and Approves QDRO:

• • The last step involves the plan administrator’s final acceptance. This acceptance completes the QDRO process.

 

(505) SANCHEZ HELPS YOU UNDERSTAND QDRO AND RETIREMENT ACCOUNTS IN NEW MEXICO

 

Matthew Sanchez has handled divorce cases all across New Mexico, for more than a decade.  Sanchez can help you complete your divorce in Albuquerque, Rio Rancho, Santa Fe, Los Lunas, Belen, Grants, and Estancia. Call an attorney that has the trial experience to know what he’s talking about.  Call (505) SANCHEZ.