QDRO Corner: Beware of Model Orders
Many plans provide model or sample orders for QDRO attorneys to use in the preparation of the Order for their clients. These are extremely useful tools to determine a plan’s preferred terms and mandatory provisions. However, these can also be misleading, or omit terms or provisions that may be beneficial to your client.
For example, most pension plans governed by ERISA provide for both a shared and a separate interest payment option. However, if the plan prefers one division method to another, then it may provide only the preferred model to you or try to dissuade you from using the other division method.
Non-mandatory QDRO terms may include how to reconcile if the plan pays one party’s share to the other by accident. Omitting this term may lead to litigation over who had the burden to recognize and fix the mistake, the plan or either party. An easy way to avoid the potential litigation is to state the protocol here, such as reimbursing the plan, or the other party.
Another non-mandatory term that is quite useful is for the court to retain jurisdiction in the event an amended QDRO is needed. Amended QDROs are sometimes necessary due to no fault of the parties, such as a merger with another plan resulting in changed rules, and it is best to know that the Court will always have jurisdiction to enter the new order if needed.
Think carefully about your client’s particular needs with respect to their QDRO and if you have a model order, treat it as a great first step in drafting the order.
