Benefits Plans - Retirement Savings Plans: Divorce (QDRO)
What is a QDRO?
The term QDRO (Qualified Domestic Relations Order) refers to a court order that is made under a state’s domestic relations law or community property law. It typically deals with property rights, alimony, or child support.
Can a QDRO extend to a retirement plan?
Yes. A QDRO may involve assigning all or a portion of a participant’s retirement plan account accumulations to an alternate payee.
Who is an alternate payee?
An alternate payee is typically the participant’s spouse or ex-spouse but can be another person such as a child or other dependent. A QDRO may also name more than one alternate payee.
Is the University of Michigan Retirement Plan subject to Title I of ERISA?
No. The University of Michigan Retirement Plan is a governmental plan and is not subject to Title I of ERISA (Employee Retirement Income Security Act), the Federal law that includes provisions on the administration of a QDRO.
How does a QDRO apply to the U-M Plan if it is not subject to Title I of ERISA?
Like many governmental plans, the University of Michigan Retirement Plan will accept a valid QDRO.
How does a QDRO assign benefits in a retirement plan?
A valid QDRO must meet several requirements in order to be valid. For example, it must be a court order and not a private agreement. In addition, several pieces of information must be stated in the QDRO regarding the assignment of a participant’s retirement plan benefits or accumulations. These include the person who will receive the benefits or rights to the benefits (called an alternate payee) and the amount of the participant’s account to be assigned.
Failure to meet these requirements can result in severe tax consequences and tax penalties to the plan participant. Consult with a qualified legal advisor for more information on the requirements to create a valid QDRO.
Once a QDRO has been established, a certified copy should be forwarded to the appropriate investment carrier (TIAA-CREF and/or Fidelity Investments). The participant or the alternate payee can do this. The investment carrier(s) have their own process to determine if the QDRO is valid and will send a kit to the alternate payee to set up his or her own account. The assets are then transferred per the terms of the QDRO to the alternate payee’s account.
What role does the University play in determining if an order is a valid QDRO?
None. TIAA-CREF and Fidelity Investments perform this function on behalf of the University. Do not send a QDRO to the University of Michigan; forward it directly to the appropriate investment carrier(s) for handling at the addresses listed below.
I’m a party to or am involved in developing a QDRO; where can I obtain information on the participant account balance?
Contact TIAA-CREF and Fidelity Investments for account balances and other information as they serve as the custodian of the records for the University of Michigan Retirement Plan. The University does not have information such as account balances and designated beneficiaries.
Where can I obtain information on the features the retirement plan, such as availability of withdrawals, rollovers, and transfers?
This information is contained in the plan handbook. You may download a copy from the Benefits Office website or request a copy by calling the Benefits Office at 734-615-2000.
When can alternate payee cash out or rollover accumulations he or she obtained through a QDRO?
At any age. There are no plan restrictions to alternate payees on withdrawals and rollovers.
Who should I call if I have questions on a QDRO?
Plan participants, spouses, ex-spouses, and their legal representatives with questions should contact TIAA-CREF and Fidelity at the numbers listed below. Consultants can answer questions on the steps involved in a QDRO, forms needed to transfer accumulations, and assistance in the process.
What steps should an alternate payee follow who has a QDRO?
The University of Michigan in its sole discretion may modify, amend, or terminate the benefits provided with respect to any individual receiving benefits, including active employees, retirees, and their dependents. Although the university has elected to provide these benefits this year, no individual has a vested right to any of the benefits provided. Nothing in these materials gives any individual the right to continued benefits beyond the time the university modifies, amends, or terminates the benefit. Anyone seeking or accepting any of the benefits provided will be deemed to have accepted the terms of the benefits programs and the university's right to modify, amend or terminate them.