Splitting Retirement Benefits: Your Guide to QDROs for the Thurgood Marshall College Fund 403(b) Plan

Most 401(k)-type plans include contributions made by both the employee and the employer. In the Thurgood Marshall College Fund 403(b) Plan, determining what portion of the account was contributed during the marriage is the first step in dividing the assets accurately. These contributions are usually divided based on either a set percentage or a specific date range — typically from the date of marriage to the date of separation or divorce.

Be aware: Employer contributions may be subject to a vesting schedule. That means the full account balance might not be fully owned by the participant yet, and the non-employee spouse (or “alternate payee”) may not be entitled to withdraw any unvested amounts during the QDRO division.

Vesting reflects how much of the employer’s contribution the employee actually owns over time. If the employee isn’t fully vested in their employer contributions at the time of divorce, the alternate payee may only receive the vested portion. For instance, if the employer has a 6-year graded vesting schedule and the employee has worked for only 3 years, the alternate payee might only be entitled to 60% of the employer-funded portion.

Unvested amounts typically remain with the plan if the participant leaves the job before becoming fully vested. It’s important for the QDRO to make clear which portion is subject to division and which may be forfeited if not vested.

If the participant has an outstanding loan from the Thurgood Marshall College Fund 403(b) Plan, it could impact the amount available to divide. There are two typical approaches:

• Include the Loan in the Account Value: The alternate payee receives a share as if the loan weren’t there, treating it as an asset the participant has already taken for their own benefit.
• Exclude the Loan from Division: The loan is considered a reduction in the account, and both parties share what remains.

We typically recommend including the loan in the account value unless there’s a strong reason not to — otherwise, the participant could reduce the account balance intentionally through borrowing and keep a bigger share post-divorce.

The Thurgood Marshall College Fund 403(b) Plan may contain both Roth and traditional subaccounts. These are very different from a tax standpoint:

• Traditional 403(b): Contributions made pre-tax; withdrawals are taxable.
• Roth 403(b): Contributions made post-tax; withdrawals may be tax-free if certain conditions are met.

The QDRO must indicate whether the alternate payee is receiving a share of the Roth, the traditional, or both. It’s essential to specify this because the tax treatment differs after transfer. If it’s not clear, the plan administrator may need clarification or may reject the QDRO entirely.

Because this plan is sponsored by an “Unknown sponsor,” your attorney or QDRO preparation specialist will need to locate and confirm the correct contact for the plan administrator. This might involve outreach to the employer, reviewing statements, or contacting plan providers like Fidelity, TIAA, or Vanguard if listed on past account paperwork.

The QDRO must reflect the specific terms of the Thurgood Marshall College Fund 403(b) Plan — including how to divide employee/employer contributions, handle potential loan offsets, address vesting schedules, and differentiate Roth vs. traditional funds. A generic QDRO won’t cut it for a plan like this.

Some plans allow for pre-approval of the QDRO before it’s filed with the court. If possible, it’s always best to take this step first. It helps avoid the extra effort of having to re-file a corrected QDRO due to technical rejection by the administrator. At PeacockQDROs, we always check for pre-approval options and handle the process for you.

Once approved, the QDRO must be signed by the judge in your divorce case and officially filed with the family court. This process varies by state, but we handle all the filings and procedural steps necessary to get the Court’s certification.

The last step is sending the court-certified QDRO to the Thurgood Marshall College Fund 403(b) Plan’s administrator. From there, the plan will process the division and create a separate account for the alternate payee if applicable. Tracking and follow-up is often required — something we always provide at PeacockQDROs to ensure your QDRO actually gets implemented.