Understanding QDROs for the Bank of Ann Arbor Employees 401(k) Profit Sharing Plan
If you or your spouse are participants in the Bank of Ann Arbor Employees 401(k) Profit Sharing Plan and are going through a divorce, you’ll need a Qualified Domestic Relations Order (QDRO) to divide this retirement benefit. A QDRO is a legal order that allows retirement benefits from a qualified plan to be split between divorcing spouses. But when it comes to 401(k) plans like this one, the process isn’t always straightforward. Vesting schedules, loan balances, Roth accounts, and employer contributions all add complexity.
At PeacockQDROs, we’ve completed thousands of 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.
Plan-Specific Details for the Bank of Ann Arbor Employees 401(k) Profit Sharing Plan
The retirement plan we’re discussing here is:
- Plan Name: Bank of Ann Arbor Employees 401(k) Profit Sharing Plan
- Sponsor: Unknown sponsor
- Address: 125 S. 5TH AVENUE
- Plan Type: 401(k) with Profit Sharing
- Organization Type: Business Entity
- Industry: General Business
- Effective Date: 1996-01-02
- Status: Active
- Plan Year: 2024-01-01 to 2024-12-31
Certain plan details such as the EIN, plan number, total assets, and participant count are currently listed as “Unknown.” However, you’ll need to provide the EIN and plan number to complete your QDRO documentation. If you’re unsure where to find these, the plan’s Summary Plan Description (SPD) or your divorce attorney can help track them down.
QDRO Basics: Why You Need One
You cannot simply write retirement division terms into your divorce decree and expect the plan to honor them. A QDRO is the mechanism that instructs the retirement account administrator to divide the account without triggering taxes or early withdrawal penalties. Without a QDRO, the non-employee spouse (called the “Alternate Payee”) has no legal claim to any portion of the plan, even if the divorce agreement says otherwise.
Common 401(k) Challenges in QDROs
1. Employer Contributions and Vesting Schedules
The Bank of Ann Arbor Employees 401(k) Profit Sharing Plan likely includes both employee deferrals and employer profit-sharing contributions. However, employer contributions usually come with a vesting schedule. This means some of those contributions may not be fully “owned” by the participant unless certain service requirements are met. When drafting a QDRO, it’s critical to clarify whether the division applies only to vested amounts or includes future vesting. If you don’t, you risk confusion or miscalculation down the line.
2. Outstanding Loan Balances
401(k) participants may have taken out plan loans against their retirement savings. Here’s where it gets tricky: most plans will not assign a share of unpaid loan balances to the Alternate Payee. If your spouse has an outstanding loan, that amount is typically excluded from your share unless specifically addressed in the QDRO. You must decide how fair it is to calculate your portion based on an inflated total that’s partially “missing” due to a loan.
3. Roth vs. Traditional Contributions
Some 401(k) plans include Roth subaccounts. These after-tax contributions have different tax treatment than traditional pre-tax contributions. When dividing a 401(k) that includes both types, it’s essential your QDRO specifies the treatment and breakdown. If not, you could wind up with unintended tax consequences—or worse, delay in distribution while the plan administrator seeks clarification.
Drafting Tips for Dividing the Bank of Ann Arbor Employees 401(k) Profit Sharing Plan
Use Clear, Formula-Based Language
QDROs for 401(k)s should use date-specific formulas, such as “50% of the Participant’s vested account balance as of [date], adjusted for gains and losses thereafter.” Avoid fixed dollar amounts unless you’re certain the account won’t fluctuate during the QDRO process.
Address Each Account Type Separately
If Roth and traditional contributions exist within the Bank of Ann Arbor Employees 401(k) Profit Sharing Plan, the QDRO should divide each separately. This avoids confusion and helps ensure tax-deferred and after-tax elements aren’t mixed improperly, which could trigger IRS scrutiny.
Include Language on Loans and Vesting
Specifically state whether any outstanding loan balances should be included or excluded from the account balance when calculating the Alternate Payee’s share. Similarly, indicate whether the awarded amount is limited to vested balances or includes amounts that may vest in the future.
Filing and Processing the QDRO
Once the QDRO has been drafted, ideally it should go through a pre-approval process with the plan administrator of the Bank of Ann Arbor Employees 401(k) Profit Sharing Plan. This helps avoid rejections after court entry.
After preapproval, the final QDRO must be signed by both parties, filed with the divorce court, and certified. Only then can it be submitted to the plan for implementation. At PeacockQDROs, we handle the entire process, not just the drafting. Our clients don’t have to worry about forms bouncing back due to minor errors or missing requirements.
What Happens After the QDRO is Approved?
Once the Bank of Ann Arbor Employees 401(k) Profit Sharing Plan receives and approves the QDRO, they’ll establish a separate account for the Alternate Payee and transfer the awarded funds. If the Alternate Payee wishes, they can roll the balance into an IRA to defer taxes. If they cash it out instead, taxes and possible penalties may apply depending on age and account type (Roth or traditional).
It’s also worth noting: a QDRO can be implemented long after the divorce is finalized. However, waiting too long increases the risk of account changes, suspensions, or even death of the participant—all of which can complicate or even block enforcement.
Avoiding Mistakes When Dividing 401(k) Assets
401(k) QDROs are filled with pitfalls. Here are common errors we see:
- Failure to address vesting timelines for employer contributions
- Not distinguishing between Roth and traditional subaccounts
- Missing loan treatment language
- Using vague or ambiguous division formulas
To see more mistakes and how to avoid them, check our article: Common QDRO Mistakes.
Plan Administrator Requests
Every plan has slightly different administrative procedures. Unless you’ve dealt with the Bank of Ann Arbor Employees 401(k) Profit Sharing Plan before, it’s difficult to predict the turnaround time or review process. Learn what affects QDRO timelines in our post on QDRO processing time.
How PeacockQDROs Can Help
At PeacockQDROs, we don’t believe in leaving clients halfway. Our services include:
- Plan document research, including getting the plan number and EIN if you don’t have it
- Customized QDROs that reflect the unique terms of your divorce
- Plan administrator submissions, court filings, and follow-ups
- Clear guidance on what to expect at each stage
We maintain near-perfect reviews and pride ourselves on a track record of doing things the right way. If you’re dividing a 401(k) like the Bank of Ann Arbor Employees 401(k) Profit Sharing Plan, you’ll want it done right—because fixing a bad QDRO after the fact is exponentially harder.
Start Protecting Your Share Today
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 Bank of Ann Arbor Employees 401(k) Profit Sharing Plan, contact PeacockQDROs. We specialize in QDROs and have successfully processed thousands of orders from start to finish.
Get the answers you need—explore our QDRO resources or reach out for personalized help if you’re in one of our service states.