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The Association of Divorce Financial Planners (ADFP) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. Web site: www.nasbatools.com.



The Basics of Domestic Relations Orders

A DOMESTIC RELATIONS ORDER (DRO) or a QUALIFIED DOMESTIC RELATIONS ORDER (QDRO)
This is a court order which instructs a pension plan to pay an Alternate Payee (or former spouse) a portion of retirement benefits accrued by a Participant due to an equitable distribution agreement in a divorce. Court orders can be drafted to assign a portion of benefits to an Alternate Payee for a variety of different types. However, each type of plan has its own guidelines and methods for distributing such benefits. Below is a discussion of the various types of plans, and the manner in which they will distribute benefits between divorcing parties.

ERISA DEFINED BENEFIT PLANS
This is a private retirement plan set up by a company, union or individual that provides a participant with a monthly income for life upon retirement. Examples: IBM Retirement Plan, AT&T Pension Plan, Bricklayers Pension Fund-Local 21.

When a QDRO is drafted for this type of plan, benefits may commence to the Alternate Payee when the Participant reaches his/her earliest retirement age or when he/she actually retires or at any time in between. The benefit is distributed in monthly payments for either the lifetime of the Participant or the Alternate Payee.

ERISA DEFINED CONTRIBUTION PLANS
This is a private tax deferred savings plan set up by a company, union or individual that will provide an income to a participant upon retirement. Examples: Any Thrift Savings Plan, Profit Sharing Plan, or Employee Stock Ownership Plan sponsored by a company, John Doe IRA Account #123456 (see Form #2).

Pursuant to a QDRO, benefits may be paid in a lump sum payment to the Alternate Payee immediately, when the Participant reaches his/her earliest retirement age or at any other time as permitted by the plan.

FEDERAL GOVERNMENT PLANS
Government employees are members of either the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS). Examples: employees of the Postal Service, Federal Aviation Dept., civilian employees on military bases (call us for a form).

When a Court Order Acceptable for Processing is drafted, monthly benefits will commence to the Alternate Payee when the Participant retires, and will continue being paid for the lifetime of the Participant. If the Alternate Payee is entitled to a Former Spouse Survivor Annuity, such monthly annuity shall commence upon the Participant's death and continue for the life of the Alternate Payee.

UNITED STATES MILITARY
The Military Retirement System provides benefits to members of the uniformed services. Examples: Army, Air Force, Navy, Marines, Coast Guard, Reserves, National Guard, Public Health Service, and the National Oceanic and Atmospheric Administration (call us for a form).

When a Retired Pay Court Order is drafted, monthly benefits will commence to the Alternate Payee when the Member retires, and will continue for the lifetime of the Member. If the Alternate Payee is entitled to a Survivor Benefit Plan Annuity (SBP), such monthly annuity shall commence upon the Member's death and continue for the lifetime of the Alternate Payee.

STATE & LOCAL GOVERNMENT & PUBLIC SCHOOL EMPLOYEES PLANS
Anyone who is employed by a state or local municipality in any capacity or any public school teacher throughout the country. Examples: Connecticut State Employees Retirement System, District of Columbia Police Officers & Firefighters Retirement Plan, New Jersey Teachers Pension & Annuity Fund (call us for a form).

When a Domestic Relations Order is drafted, monthly benefits will commence to the Alternate Payee when the Participant retires, and continue for the lifetime of the Participant. Under some plans, the Alternate Payee may be designated as the beneficiary of a survivor annuity under a specific benefit option which must be specified in the order, otherwise, typically all payments to the Alternate Payee cease upon the Participant's death.

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