Divorce and the Verisign, Inc.. 401(k) Plan: Understanding Your QDRO Options

Like most 401(k) plans, the Verisign, Inc.. 401(k) Plan likely includes both employee deferrals and employer-matching contributions. A QDRO can be used to divide both types of contributions, but care must be taken to understand what portion of the employer’s contributions are vested as of the date of divorce or valuation.

Only vested portions of employer contributions can be assigned to the alternate payee. If your QDRO attempts to divide unvested funds, it may be rejected by the plan administrator.

Vesting refers to the portion of employer contributions that the employee has earned the right to keep, even if they leave the company. Many 401(k) plans use a graded vesting schedule (e.g., 20% vested after two years, 40% after three, etc.).

In the divorce process, you’ll need to work with a QDRO professional to determine exactly how much of the employer contributions are vested at the valuation date specified in the order. This protects both spouses by ensuring that only funds truly available are divided.

If the participant has taken a loan against their 401(k) balance, the outstanding loan amount will reduce the available balance for division. The QDRO should clearly state whether:

• The loan balance should be excluded before dividing the plan
• Loan repayment obligations will remain with the participant
• The alternate payee’s share will be calculated based on a net or gross balance

Failing to address loan balances in a QDRO leads to confusion and delays – sometimes even rejected orders. At PeacockQDROs, we make sure to gather this data during the prep phase to avoid stumbling blocks later.

Another important factor in the Verisign, Inc.. 401(k) Plan is identifying Roth versus Traditional 401(k) contributions. Roth 401(k) funds grow tax-free but are funded with after-tax dollars. Traditional 401(k) contributions grow tax-deferred, and withdrawals are taxed as income.

Your QDRO should outline if the division is:

• Pro-rata across all account types (Roth and Traditional)
• Limited to one specific account type
• Based on traced contributions

Inaccurate descriptions of how funds should be divided between Roth and Traditional sub-accounts can lead to mistakes in the money ultimately transferred to the alternate payee.

Contact the HR or benefits administrator at Verisign, Inc.. 401(k) plan for a copy of the plan’s QDRO procedures, current Summary Plan Description, and to obtain the required EIN and plan number. Without these, the QDRO cannot be processed.

This includes the valuation date (date of divorce, date of filing, etc.), percentage or dollar amount to be awarded, how gains/losses are treated, and treatment of loans and vesting.

At PeacockQDROs, we draft your QDRO in compliance with the plan’s unique rules and ERISA requirements. Our team ensures that the order includes language specific to the Verisign, Inc.. 401(k) Plan and avoids red flags that cause delays.

If Verisign, Inc.. 401(k) plan allows it, we’ll submit the draft for pre-approval. This review step saves everyone time and reduces the chance of the court-approved version being rejected later.

Once approved (if required), the QDRO must be signed by the judge in your divorce case. We handle this court filing as part of our full-service approach.

After filing, we send the court-approved QDRO to Verisign, Inc.. 401(k) plan for processing. We also communicate directly with the administrator to track progress until the alternate payee’s funds are fully distributed.