In Texas and around the country, qualified domestic relations orders are used to divide up pension benefits. A QDRO is intended to provide for two different circumstances, each of which mandates the order be drafted in a different way in order to give it its intended effect.
QDROs may be used to provide temporary or permanent support payments to the owner's spouse, dependent child or former spouse. They may also be necessary as a part of the marital property division in a divorce. In some cases, people opt to split the payments received, giving a percentage of each payment to the recipient. This normally occurs when the owner has already began to receive payments from it.. Shared payment orders must outline the percentage of the payment plus the start and end date of when the recipient will receive payments under the order.
QDROs that are intended to divide the retirement benefit are generally written to divide the amount held in the account into two separate portions. The portion for the former spouse is then paid to him or her in a lump sum. He or she may also opt to roll it into a different account. These orders must specify the percentage of the total amount to be received or to receive it in payments separate from those of the plan's participant.
Complex property division is often a challenging part of a divorce, especially when the couple has accrued significant assets such as retirement accounts and pension benefits while they have been married. Texas treats the amounts that have accrued in an account during the marriage as community property. Those facing this type of situation should with their divorce attorney about how to draft the QDRO in the manner best suited for their situation.
Source: Employee Benefits Security Administration, "QDROs - Drafting Qualified Domestic Relations Orders", accessed on Feb. 13, 2015