In a Retirement Transfer, Who Handles What?

Different people or organizations cover many steps in a retirement transfer.

As you will read below, the parties are responsible for most steps. However, that responsibility can be delegated to the party’s attorney or the retirement order drafting attorney if they choose. The most important part of each of these steps is making sure it is clear who is taking the responsibility. While the blame belongs to both parties to follow through on getting the retirement order drafted and submitted (if not agreed otherwise), which one, in particular, must be proactive to start the process and make sure to see it through to completion?

It is best practice to state the responsibility clearly in any settlement agreement or have the judge designate one party to be responsible for the retirement order process in an order.

So, how does it happen, and who is responsible for each step?

1. Figure out the division of the retirement asset. The parties are responsible for this or for taking the matter to court and requiring the Court to order a division.

2. Have the Retirement Order prepared. The parties are responsible for hiring an attorney to prepare the retirement order and providing all necessary information. Such information includes the document that explains the asset division, a statement from the account that will be divided, and sometimes a letter or additional information from the account being divided. In best practices, the order is prepared while the parties negotiate their agreement or immediately following the divorce. All information the drafting attorney needs would be gathered in discovery or informal document exchange. The parties should agree on which is responsible for hiring the attorney or if it will be a neutral/joint representation.

3. Paying for the Retirement Order to be prepared. The parties are responsible for determining how the drafting attorney will be paid.

4. Signing the Retirement Order. The parties are responsible for signing the retirement order, or they may have their counsel sign on their behalf if appropriate in their jurisdiction.

5. Submitting the retirement order to the Court. The judge must sign the retirement order. The parties or their counsel are responsible for submitting the order to the Court.

6. Obtain Certified Copies from the Court and mail them to the Plan. Plans require that certified copies, or true test copies, be submitted. These special copies come with a seal from the Clerk of the Court to certify that the order is a true representation of the order the Court has entered. The parties are responsible for determining who will be responsible for this step. It could be a party, their counsel, or the attorney who drafted the QDRO.

7. Respond to the Plan’s questions. The parties are responsible for answering any questions posed by the Plan in a timely manner. This may include but is not limited to, the person receiving the funds being responsible for filling out forms to notify the plan of where they would like their funds sent.

8. Figuring out where the funds should be sent. This is for the party receiving the funds. Perhaps it is worth a conversation with a financial planner to figure out what type of account should the funds be rolled into, or should some of the funds be taken as cash and the rest rolled over? This is not a decision that an attorney can make on the party’s behalf.

9. Transferring the funds. The plan administrator will notify the plan’s financial institution when the retirement order is approved and instruct them to transfer the funds. The financial institutions will then coordinate to transfer the funds to the receiving party’s account. This transaction may also involve the party’s financial advisor, depending on the type of account the funds are being transferred to. The attorneys do not have access to the accounts or the fund transfer. The parties have the most access to check up on the status of the transfer because they already have access to their own accounts. The financial institutions view attorneys as third parties and typically need the account holder’s social security number, date of birth, and address to get any information if they get any at all. Some institutions require that the account holder be on the phone to share the status of the transfer.

Depending on how quickly the financial institutions and courts are processing and how quickly the parties provide information to the drafting attorney, this process can be as quick as 2-3 months or can take much longer.

If you have additional questions regarding your retirement order, or need assistance contact our office at 240-396-4373.