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Dividing retirement benefits at divorce shouldn't be this hard

For many people going through a divorce, obtaining a fair share of a former spouse’s retirement benefit is essential to ensuring financial security in old age. This is especially true for individuals who worked in the home while they were married, caring for children or sick or elderly relatives. That is because retirement benefits can be the largest asset of a marriage, often worth more than the family home.

Divorce court orders (and court-approved property settlements) can say that a former spouse is entitled to a share of a retirement benefit, giving that former spouse a legal right to that income. But the divorce decree alone is not enough to require a retirement plan to pay the benefit. Hundreds of people contact the Pension Rights Center every year seeking help in obtaining benefits awarded under a divorce decree. Why?  

First, the divorce court order has to specify that the retirement benefits should be divided. Although most family court judges and family law attorneys know that they should address retirement benefits in the divorce decree, some people still fall through the cracks. This is more likely to be a problem among couples who cannot afford attorneys and have to represent themselves, and among couples who divorce through administrative or mediation processes that don’t involve going before a judge.

Second, couples whose divorce decree says that a retirement benefit should be divided need an additional court order that they can send to the retirement plan. Calculating retirement benefits is complicated, which means dividing them can also be complicated, and there are many different ways to divide a benefit. For this reason the law requires that a second, more detailed order be sent to the plan. This second order is called a qualified domestic relations order or “QDRO.” (See our fact sheet on QDROs)

Third, many family law attorneys do not draft QDROs. That is because the laws governing the division of retirement plans at divorce are complex. Instead, they refer clients to QDRO drafting specialists, who typically charge hundreds of dollars to do the calculations and prepare these orders. In some cases the attorney does not explain to the client that a QDRO is necessary. People who represented themselves in the divorce proceedings often do not know that they should try to locate a QDRO specialist.

Fourth, individuals who have managed to obtain a QDRO then have to submit it to the retirement plan. Some retirement plans charge submission fees for QDROs. The average fee is between $350 and $400, and some plans charge as much as $1,800. Also, retirement plans reject QDROs if they do not meet the requirements of the law and the unique rules set by the plan.

This means that a lot of people who are legally entitled to a share of a former spouse’s retirement benefit are unable to obtain it because the process is so difficult. This is especially a problem for women, who are more likely to give up their careers to be stay-at-home parents or caretakers, and who typically earn less both in income and retirement benefits than their male counterparts.1 Divorced women are significantly more likely to live in poverty in retirement than divorced men or married women.2

It is even harder for women who are survivors of domestic violence. Economic coercion is a typical part of domestic violence, meaning the abuser will exert financial control over the other partner by preventing her from accessing her accounts, taking her paycheck, separating her from her support network, or forcing her to quit her job.3 This means that women who have experienced domestic violence are less likely to earn retirement benefits of their own. Since financial dependence is one of the top reasons why women don’t leave abusive relationships, ensuring that women can access retirement benefits after divorce may help provide women the freedom they need to leave a violent relationship.4

The Pension Rights Center is currently working to bring together many different groups – including employers, family law judges, retirement plan administrators, family law specialists, women’s organizations, pension experts, and advocates for survivors of domestic violence – to engage in a dialogue about ways to make the QDRO process more affordable and less complex.

1See Kim Parker, Pew Research Center, Women more than men adjust their careers for family life, 2015; AAUW, The Simple Truth About the Gender Wage Gap, 2018. 

2 See Social Security Administration, Office of Retirement Policy, Population Profile, 2016.

3 See NNEDV Womenslaw.org, Domestic Violence, 2017.

4 See Nancy Salamone, Forbes, Domestic Violence and Financial Dependency, 2010. 

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