The Paperwork That Got a Woman $323 a Month From Her Ex-Husband’s Pension

The problem

When Tonia Yates split from her husband in the late 1990s, their divorce decree stipulated that she was entitled to a portion of the Ford Motor Co. pension benefit that had accrued to him during their 15-year marriage. More than two decades later, Yates, now 66 and a supervisor at a Red Lobster near Cleveland, learned from her children that her ex had retired, so she sent Ford a copy of her divorce decree and asked for her share of his pension. That’s when she hit a brick wall. Yates didn’t have a QDRO.

The advice

If you’re wondering, What’s a QDRO?, you’re not alone. A QDRO (pronounced “quad-row”) is a qualified domestic relations order, a legal document that accompanies a divorce decree, like an order for child support. QDROs allow a pension or balance in an employer-sponsored retirement account like a 401(k) to be split without either spouse having to withdraw money, an action that might incur a tax bill and penalties.

Negotiating for a share of retirement funds, as Yates did during her divorce, is incredibly smart, since it can be one of a married couple’s most valuable assets. Unfortunately, many people get the paperwork wrong.

A divorce decree requiring a QDRO should name who has to obtain it (typically the spouse receiving the funds). That person must find a lawyer or specialist to write the QDRO, at a cost of $500 or more. Next, the court must sign it, the retirement plan administrator has to verify that it complies with plan rules, and both spouses have to sign off on it. Only then can the court approve it. Money in 401(k)s and similar accounts is divided when the plan processes the approved QDRO — an incentive to get it done. But with pensions, payments might not begin for years after the divorce, so people often procrastinate. “It’s another expense after an exhaustive process,” says financial planner Amy Beardsley Irvine.

So how can you be sure that you will receive your share of your ex’s retirement benefits?

If you’re divorcing now: Have the QDRO approved by the court as part of the divorce process. Negotiate for survivor benefits, says Rose Scollard, an attorney with Pro Seniors, a nonprofit that assists older Americans with pension and retirement issues in Ohio. Monthly payments might be smaller than what you’d receive if the payments ceased with your spouse’s death, but Scollard believes the trade-off is worth it — especially for women, who are likely to outlive their ex-husbands.