Firm News
Why You Need Your QDRO Done Sooner Rather Than Later
You’ve just left the courthouse after presenting your agreement and giving testimony to the magistrate in an uncontested divorce. Or maybe today was the third day of a merits trial, and the judge decided who got what. Whether your divorce was amicable or adversarial, whether you’re happy or sad about the outcome, you’re probably relieved that it’s over. It probably isn’t. If you or your former spouse has an interest in a retirement plan – or several plans – it is likely that a division or transfer of retirement assets is part of your agreement or your Judgment of Divorce….
What Is Mediation?
We’ve all heard the stories. You know, the ones about how the ex-spouse “took me to the cleaners” or where he or she “just walked out and left us with nothing.” The emotional turmoil, fear, and anxiety of divorce has been the subject of innumerable movies and television shows. Let’s face it – divorce is an adversarial process with attorneys “fighting” for their clients, and many times the parties can justifiably see themselves as “winners” and “losers.” But it’s important to remember that all divorces are different, and it doesn’t have to be that way for you just because that’s…
Federal Phased Retirement & How It Impacts Alternate Payees
In most divorces, retirement splits are relatively straightforward: Retirement accounts and benefits are split based on a calculation determined by the court or an agreement of both parties. For federal employees, the process is a little more involved. And in 2014, the federal government threw another wrench into the retirement benefits split for federal employees with the introduction of phased retirement. What Is Phased Retirement? In some federal agencies, employees are eligible to receive half of their pension benefits while also working part-time and drawing a salary. This option isn’t available to every federal employee, and an employee must meet…
What Is the Pension Benefit Guaranty Corporation?
With the recent rash of announcements that big businesses are closing up shop – Kmart, Toys R Us, Gymboree, and more – questions are popping up about whether those who had an employer-backed pension plan are going to receive the benefits they worked hard to earn. One way that some employees have received their pensions, even if their employer no longer has the funds to support the pension program, is through the Pension Benefit Guaranty Corporation. What Is the Pension Benefit Guaranty Corporation? Pension Benefit Guaranty Corporation (PBGC) is a non-profit organization that guarantees continued payment of private-sector defined-benefit pension…
Why You Shouldn’t DIY Your QDRO in a DIY Divorce
Choosing to handle a divorce without an attorney is a route many more couples are taking. For couples that can agree on everything and are willing to put in the time, it’s a great option to help keep anger and costs lower. While there are forms for everything from initial divorce filings to final judgments available online or through your county’s courthouse, there are some portions of your DIY divorce that are best to let an experienced attorney handle. An important example of this is a QDRO, or Qualified Domestic Relations Order. What Is a QDRO? A QDRO is a…
Getting Cash From a 401k Without Penalty
Alternate Payee Internal Revenue Code 72(t) imposes the 10% penalty on early withdrawals (that is, withdrawals before the plan Participant has reached the age of 59 ½ ). Sec. 72(t)(2) lists a number of exceptions for the imposition of the penalty. Sec. 72 (t)(2)( c ) says that the 10% penalty does not apply with respect to distributions to the Alternate Payee under QDRO as defined by Section 414(p)(1). The Alternate Payee may roll the whole distribution into another qualified plan or IRA, roll some/cash some, or take the whole distribution as cash. This is a one-time opportunity: once the…
That Didn’t Turn Out the Way I Expected…
The Circuit Court has jurisdiction over most family matters. But the Circuit Court judge doesn’t necessarily have the last word. If you think the trial judge was wrong, you should consider an appeal. Maryland Law provides two options for appeal. In Banc Review In an In Banc review, three circuit court judges sit as a panel and review the decision of the trial judge. There are pros and cons to In Banc review. On the plus side, the process is faster and less expensive than a formal appeal (see below). The downside, however, is that you waive any right to…
QDRO Top Ten List
1. Know the real name of the plan. Does your client know what kind of retirement plan he or she participates in? It might surprise you to know that many people use the words “retirement” and “pension” interchangeably. Today however, more people have 401k plans as the basis of their retirement than traditional pensions. Even if they know what kind of retirement plan they have, most people don’t know its real name. What one party calls “my 401k” might actually be called “The X Company Savings Plan,” and “her pension” might be “The Y Company Retirement Security Plan.” Knowing the…