The Wisconsin Supreme Court avoids an "absurd" QDRO result
Although most aspects of divorce are governed by state law, the assignment of certain retirement benefits which occurs when a retirement account is divided is subject to federal law.
September 04, 2013 /24-7PressRelease/ -- The Wisconsin Supreme Court avoids an "absurd" QDRO result
Article provided by Jacobson Legal Group, S.C.
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When a married couple in Wisconsin separates, there is more to the divorce than the decree terminating the marriage. The court hearing the case has to make decisions about child custody, support and visitation (if the couple has children), spousal support and property division. Property division can be a complex issue, requiring determinations about splitting up everything from the equity in the family home to retirement benefits. Although most aspects of divorce are governed by state law, the assignment of certain retirement benefits which occurs when a retirement account is divided is subject to federal law.
One of the applicable federal laws is the Employee Retirement Income Security Act or ERISA. Under ERISA, a person's retirement interests may be assigned only if the decree or order that creates or recognizes a former spouse's interest in that person's retirement benefits constitutes a qualified domestic relations order, also referred to as a QDRO.
What is a QDRO?
The Employee Benefits Security Administration of the Department of Labor defines a QDRO as a domestic relations order that creates or recognizes the interest of an alternate payee's right to receive all or part of the benefits payable with respect to a participant in a retirement plan. In the case of property division pursuant to a divorce, the alternate payee would be the former spouse of the plan participant. The decree or order must be issued by a court or other state authority which has the power to approve a property settlement agreement and is required to contain certain information.
The Johnson v. Masters case
A question concerning QDROs was recently before the Wisconsin Supreme Court. In the case of Johnson v. Masters, an ex-wife brought suit to collect her interest of her former husband's pension. The problem? She brought the action more than 20 years after she and her husband were divorced. Under the divorce's property settlement agreement, the wife was awarded a 50 percent interest in her husband's pension with the Wisconsin Retirement System. In order to secure her rights to that interest, the decree required the wife to submit a QDRO to his retirement plan. However, in 1989, the year the divorce decree was entered, the WRS was not authorized to accept such orders.
The Wisconsin Legislature passed a law in 1998 allowing the WRS to accept QDROs. The wife did not submit a QDRO at this time though. In September 2010, the wife sought to compel her husband to provide his pension information so that she could prepare the QDRO. The court found that her action was barred by the statute of repose, which prevents a person from filing a lawsuit if he or she does not do so within a set amount of time, in this case 20 years.
The Wisconsin Supreme Court reviewed this finding and held that the imposition of the bar would be "absurd and unreasonable." Because the wife would not have been allowed to submit a QDRO to the WRS until 1998, when the Legislature authorized the system to accept QDROs, the statute of repose could not begin to run against the wife until then, thus giving her until 2018 to submit her order.
Drafting a QDRO is a demanding task. If you are contemplating a divorce and have questions about the division of retirement benefits and other marital property or questions about the divorce process in general, a family law attorney can give you guidance and inform you of your rights and responsibilities under the law.
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