Dividing retirement assets during a divorce can be one of the most critical—and contentious—parts of the process. If you or your spouse participated in the Packaging Corporation of America Thrift Plan for Hourly Employees, it’s important to understand how a Qualified Domestic Relations Order (QDRO) works specifically for this type of 401(k) plan.
QDROs aren’t one-size-fits-all. Each employer’s plan has its own procedures, account types, and rules that can significantly impact the division of retirement benefits. In this article, we’ll walk you through the essentials of dividing the Packaging Corporation of America Thrift Plan for Hourly Employees through a QDRO based on our extensive experience at PeacockQDROs.
Below is the specific information we know about this plan, which is essential when handling a QDRO:
A QDRO is a legal order that lets a retirement plan administrator divide retirement benefits between divorcing spouses without triggering taxes or early withdrawal penalties. For the Packaging Corporation of America Thrift Plan for Hourly Employees, a QDRO is required to assign a portion of the participant’s account to their ex-spouse (referred to as the “alternate payee”). Without a QDRO, the plan cannot legally divide the funds or disburse them to someone other than the plan participant.
This 401(k) likely includes both employee contributions (from the participant’s paycheck) and employer matching contributions. When dividing the plan, it’s critical to clarify whether the order will split all sources or only specific ones. Some divorcing spouses may agree to divide just the vested employer contributions, while others divide the total account regardless of vesting.
Employer contributions are usually subject to a vesting schedule. This means the employee must work for the company for a certain number of years to gain full ownership. If a participant is not fully vested at the time of divorce, any unvested employer contributions may be forfeited and cannot be transferred. A good QDRO will specify how to handle this—assigning only the vested portion or adjusting shares based on future vesting.
If the plan participant has taken a loan from their 401(k), the balance still owed will reduce the account’s value. But loans are not always considered when calculating the marital portion unless specifically addressed in the divorce settlement or QDRO. A properly drafted QDRO should include language on whether loans are to be factored into each party’s share.
Many 401(k) plans now offer both traditional (pre-tax) and Roth (after-tax) sub-accounts. These have very different tax consequences. Roth balances transferred to the alternate payee retain their tax-free growth treatment but have different rollover options. Be sure your QDRO treats each account type separately and in accordance with IRS rules and the alternate payee’s preferences.
QDROs are extremely technical. A small mistake can cause big delays or result in lost benefits. Common issues we see include:
We’ve broken down more of these issues inthis article about common QDRO mistakes.
You’ll need the participant’s full account statement, the divorce judgment, the plan’s QDRO procedures if available, and if possible, the plan number and EIN. Even though this plan’s EIN and number are listed as unknown, we can often locate them during the drafting process.
At PeacockQDROs, we handle all of this for you. The goal is clear language that the plan administrator will accept—and that actually gets benefits transferred promptly and accurately.
Some plans require a draft QDRO to be submitted before court filing, while others skip this step. We’ll research the process for the Packaging Corporation of America Thrift Plan for Hourly Employees to ensure it’s done right the first time.
Once the QDRO is approved and entered by the court, we submit the certified order to the plan administrator and follow through until funds are allocated correctly.
Want to know how long the process might take? See our breakdown ofthe 5 factors that determine QDRO timing.
At PeacockQDROs, we’ve completed many QDROs from start to finish. That means we don’t just draft the order and leave you to figure out the rest. We handle the drafting, preapproval (if applicable), court filing, submission, and follow-up with the plan administrator. That’s what sets us apart from firms that only prepare the document and hand it off to you.
We maintain near-perfect reviews and pride ourselves on a track record of doing things the right way. We focus on each plan’s specific structure and avoid generic templates that can result in rejected orders or delayed benefits.
If you’re dealing with the Packaging Corporation of America Thrift Plan for Hourly Employees, you need a firm that knows what to expect from 401(k) plans in the general business sector, particularly under business entity sponsorships like that of the Packaging corporation of america thrift plan for hourly employees.
If your divorce was in California, New York, New Jersey, Connecticut, Kansas, Missouri, Iowa, or North Dakota, and you have questions about qualified domestic relations orders or dividing retirement assets like the Packaging Corporation of America Thrift Plan for Hourly Employees, contact PeacockQDROs. We focus on QDROs and have successfully processed many orders from start to finish.
Get the answers you need—explore ourQDRO resources orreach out for personalized help if you’re in one of our service states.
Willie has handled hundreds of QDROs, been named as a stipulated or court-appointed expert in hundreds of orders, testified as an expert witness on QDROs and state government pension survivor benefits, and taught CLEs on QDROs, legal ethics, and military pensions. He is a three-time ABA award-winning legal author and secured a victory before the North Dakota Supreme Court. Full bio →
