Dividing retirement accounts during a divorce isn’t as simple as splitting bank accounts or home equity. For retirement assets like the United Building Services, Inc.. 401(k) Plan, a Qualified Domestic Relations Order (QDRO) is the only way to legally transfer a portion of these benefits to a former spouse or alternate payee. If you’re divorcing someone with retirement savings in this plan or you’re a participant yourself, here’s what you need to know about splitting these assets.
A Qualified Domestic Relations Order, or QDRO, is a special court order that allows a retirement plan to legally make payments to someone other than the employee—usually a former spouse—in a divorce. Without a QDRO, the plan administrator cannot divide retirement benefits, no matter what your divorce decree says.
When dealing with a 401(k) like the United Building Services, Inc.. 401(k) Plan, a QDRO is used to specify how much of the account is to be awarded to the alternate payee, what rules apply to the division, and how the payment will be made.
Here is the known information about this specific retirement plan:
Because critical data like the plan number and EIN are required for QDRO preparation and submission, we highly recommend reaching out to the plan administrator—or letting a firm like PeacockQDROs obtain that information for you.
Unlike pension plans, 401(k) plans involve actual account balances that grow (or shrink) over time. Here are the most important plan features to address when preparing a QDRO for the United Building Services, Inc.. 401(k) Plan:
This plan likely includes both types of contributions. A QDRO must specify whether the alternate payee is to receive a share of only the employee’s contributions or also a share of the employer’s matches. That distinction can make a large financial difference.
Employer contributions may be subject to a vesting schedule. If the participant isn’t fully vested at the time of divorce, some of the employer’s matching funds may not be available for division. A well-drafted QDRO must account for this by either excluding non-vested funds or drafting language to award alternate payees their share when and if those funds vest in the future.
If the participant has taken loans from their 401(k), those loans reduce the balance available to divide. A key QDRO question is whether loans should be subtracted from the total balance before division, or whether the participant alone absorbs the burden. Most alternate payees do not want to share liability for 401(k) loans, and that should be reflected in the order.
Modern 401(k) plans often contain both pre-tax (Traditional) and after-tax (Roth) components. A single participant may have, for example, $100,000 in pre-tax funds and $30,000 in Roth funds. Traditional and Roth 401(k)s have tax consequences—Roth distributions are typically tax-free, while Traditional accounts are taxed. When dividing the United Building Services, Inc.. 401(k) Plan, it’s essential the QDRO specifies these segments separately so the alternate payee understands future tax consequences.
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.
This matters when dealing with complicated plans like the United Building Services, Inc.. 401(k) Plan, especially when the plan administrator gives little information up front or when loan balances or vesting schedules get in the way of a smooth division.
We maintain near-perfect reviews and pride ourselves on a track record of doing things the right way.
Most QDRO errors occur because the drafter doesn’t understand how that specific plan works or fails to include necessary information. Some examples:
We cover more of these pitfalls in our article oncommon QDRO mistakes.
Timelines vary based on court responsiveness, plan administrator cooperation, and how complete your divorce settlement is. We’ve written more about this in our piece on5 key factors that impact QDRO timelines.
In general, expect the following stages:
If any of these steps are skipped or done incorrectly, you’ll face delays and risk losing money.
Whether you’re the alternate payee or the plan participant, consider asking:
Answering these questions correctly at the start will prevent back-and-forth with the court and delays in receiving your share of the plan.
Too many people think they can save money by having a general divorce attorney or online form fill out their QDRO. That’s almost always a mistake, especially with 401(k) plans like this one.
We know how the United Building Services, Inc.. 401(k) Plan works with QDROs—what language they’ll accept and what standards they require. You won’t lose time to unnecessary rejections or court refilings.
Start here:QDRO Services by PeacockQDROs
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 United Building Services, Inc.. 401(k) Plan, 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 →
