Like any other asset in a divorce, retirement accounts must be divided. Essentially any retirement benefits acquired or vested during the marriage belong to the community. This means that benefits acquired before the marriage are considered separate.
Under New Mexico community property laws, the only issue to be determined is when the benefits vested. This is typically readily determined by contacting the plan administrator or going over the statements associated with the benefits.
Court Order Required for Divisions of of Retirement Benefits
In order to divide retirement benefits, a Qualified Domestic Relations Order (QDRO) must be filed with the court and then forwarded to the plan administrator. Most plans will have their own form of QDRO. The administrator’s requirements must be followed exactly or the Order will be refused.
Submission and approval of the QDRO can be a rather tedious process as some plan administrators require the Order be filed and signed by the judge before they will review it to determine whether it meets their requirements. If it is refused, the QDRO must be modified, refiled with the Court and signed by the judge again. Then the QDRO must be resubmitted to the administrator beginning the cycle anew.
Court Intervention Often Required
Like any other issue related to the divorce and division of assets, the parties often do not agree on the terms of the division of retirement benefits or the essential terms of the QDRO. The process is made significantly more complicated when the parties cannot agree on the terms to be put in the QDRO.
In those cases where the parties cannot agree on the terms of the QDRO, the Court’s intervention and direction is required. Yet even then, the QDRO may take a couple of submissions and modifications prior to approval by the Plan Administrator and final division of the benefits between the parties.
This is so because the final decision to accept the QDRO belongs the QDRO plan administrator. The Court can help set the terms of the division but cannot dictate the presentation or form of the QDRO to be accepted by the administrator.
Plan Administrator Will Review Form of QDRO, Not the Substance
It is important to recognize that the plan administrator is looking to make sure the form submitted meets the plan’s technical requirements. The administrator will not look to the substance.
In other words, it is up the parties, and their lawyers if they have them, to determine the proper dates and amounts into the QDRO. As they say, garbage in, garbage out. It is possible that the QDRO will meet the plan’s requirements for filing yet still be erroneously calculated.
Seek Legal Guidance
Because of the all the challenges and complexities of the QDRO, it is important to seek legal guidance. If you cannot afford an attorney and a QDRO is necessary, then obtain the form of QDRO from the plan administrator and study the requirements carefully to insure that what you and your ex submit get it right.
Just as importantly, make sure you understand the rules regarding community property in New Mexico so that the final division of retirement accounts upon acceptance by the plan if fair to you under the law.