Qualified Domestic Relations Order (QDRO)

Qualiﬁed Domestic

Relations Order (QDRO)

Information for:

All Funds

Page 1 March 2019 Fact Sheet #83

A Domestic Relations Order (DRO) is a court order

that is separate and apart from a Judgment of Di-

vorce. A DRO provides for the equitable distribution

of pension and related beneﬁts upon the dissolution

of a marriage or civil union. A DRO that has been re-

viewed and approved by the New Jersey Division of

Pensions & Beneﬁts (NJDPB) and signed by a judge

is then deemed a Qualiﬁed Domestic Relations Or-

der (QDRO).

While the New Jersey State-administered retirement

systems are exempt from the Employee Retirement

Income Security Act of 1974 (ERISA), the NJDPB

will attempt to follow the provisions of ERISA as re-

lated to the Retirement Equity Act of 1985 (REACT),

provided such mandates do not violate applicable

New Jersey laws or administrative rules. Although

your pension is normally exempt from any liens, the

NJDPB will honor court orders for child support, ali-

mony, or equitable distribution in cases of divorce or

dissolution of a civil union.

REQUIREMENTS FOR A DRO

TO BE DEEMED QUALIFIED

The language within a DRO must clearly impose an

obligation upon the NJDPB to withhold a portion of a

member’s retirement beneﬁts for payment to an alter-

nate payee. The description of the member and the

alternate payee must be clear and speciﬁc, i.e., full

names as opposed to references to “spouse,” “former

spouse,” etc. Other necessary information includes:

• Names,addresses,andSocialSecuritynumbers

of both the member and the alternate payee;

• The specic name of the retirement system

in which the member is enrolled. New Jersey

State-administered systems include the:

— Public Employees’ Retirement System

(PERS);

— Teachers’ Pension and Annuity Fund

(TPAF);

— Police and Firemen’s Retirement System

(PFRS);

— State Police Retirement System (SPRS);

— Judicial Retirement System (JRS);

— Alternate Beneﬁt Program (ABP);

— Deﬁned Contribution Retirement Program

(DCRP);

— New Jersey State Employees’ Deferred

Compensation Plan (NJSEDCP); and

— Supplemental Annuity Collective Trust

(SACT).

The DRO must state a speciﬁc amount to be withheld

for payment to the alternate payee. See the “Sample

Matrimonial Order” later in this fact sheet. Acceptable

examples include:

• Aspecicdollaramount;

• Aspecicpercentageofthemember’sbenet;or

• Anamounttobedeterminedthroughtheappli-

cation of a coverture fraction. This type of cal-

culation utilizes a speciﬁc percentage of the

member’s gross monthly retirement allowance

multiplied by a coverture fraction where the nu-

merator is the total number of years and months

that the parties were married/partnered while

the member was a participant in the retirement

system, and the denominator is the total number

of years and months the member participated in

the retirement system.

To ensure proper tax reporting, the DRO must indi-

cate whether the withholdings are for alimony, sup-

port, or equitable distribution payments. The form of

payment will determine how the payments are re-

ported for tax purposes.

DRO EVALUATION AND GUIDELINES

Under the Retirement Equity Act, the NJDPB must re-

view each DRO providing for the payment of beneﬁts

from a retirement system maintained by the NJDPB

to someone other than the retiree to determine if the

order is qualiﬁed.

Upon receipt of a DRO, the NJDPB will provide the

participant, each alternate payee, and their legal rep-

resentatives (interested parties) with written notice

that the order was received.

DROs that have been reviewed by a judge can be

sent to:

New Jersey Division of Pensions & Beneﬁts

Attn: Wendy Wise-Whitﬁeld

P.O. Box 295

Trenton, NJ 08625-0295

Fact Sheet #83 March 2019 Page 2

Qualiﬁed Domestic Relations Order (QDRO)

This fact sheet is a summary and not intended to provide all information.

Although every attempt at accuracy is made, it cannot be guaranteed.

The NJDPB will classify the DRO as qualiﬁed if the

evaluation items to follow are determined to be either

“Yes” or “Not Applicable.” If the answer to any of the

items is determined to be “No,” the NJDPB will classi-

fy the order as not qualiﬁed:

1. Is the order a DRO?

A DRO may take the form of a judgment, decree,

or court order (including a court approval of a

property settlement agreement) made pursu-

ant to a state domestic relations law (including

community property laws). It must relate to the

provision of child support, alimony, or material

property rights to a spouse/partner (present or

former), child, or other dependent of the Plan

participant.

2. Does the order specify the plan or plans to which

it applies?

A DRO must clearly specify each plan to which it

applies (see the “Requirements for a DRO to be

Deemed Qualiﬁed” section). If multiple plans are

speciﬁed, the order of payment should be includ-

ed if appropriate.

3. Does the order specify the Plan participant by

name and mailing address?

A DRO must specify the name and mailing ad-

dress of the participant. The last known mailing

address for a current employee is sufﬁcient.

4. Does the order specify an alternate payee by

name and mailing address?

An alternate payee is a spouse/partner, former

spouse/partner, child, or other dependent of

the participant. A DRO must clearly specify the

name and address of each alternate payee.

5. Does the order create or recognize the alternate

payee’s right to all or part of the participant’s

beneﬁts under the Plan?

A DRO must create or recognize the existence of

an alternate payee’s right, or assign to an alter-

nate payee the right, to receive all or a portion of

the beneﬁts payable with respect to a participant

under a plan.

6. Does the order specify the amount or percent-

age of the participant’s beneﬁt to be paid by the

Plan to each alternate payee (or clearly desig-

nate the manner to determine the amount or per-

centage)?

A DRO must clearly specify the amount or per-

centage of the employee’s beneﬁts to be paid to

each alternate payee, or the manner in which

this can be determined.

7. Does the order state how beneﬁts must be paid

to each alternate payee?

A DRO must clearly specify the number of pay-

ments from the Plan or period to which it applies.

8. Is the order consistent with all other DROs

deemed qualiﬁed by the Plan with respect to the

participant?

A DRO cannot require beneﬁts to be paid to an

alternate payee that are required under a prior

QDRO to be paid to another alternate payee.

9. Can the DRO require designation of beneﬁciary

for group life insurance?

Court orders may be ﬁled that speciﬁcally desig-

nate the former spouse/partner to receive a life

insurance beneﬁt. For more information, see the

Divorce, Dissolution of a Civil Union, and Retire-

ment Beneﬁts Fact Sheet.

10. Is the DRO free of any unnecessary conditions,

obligations, or representations that would ap-

pear to bind the NJDPB if it approved the order?

If the DRO is free of any other conditions or ob-

ligations and meets all of the other preceding

requirements, the order can be considered qual-

iﬁed under the NJDPB’s QDRO procedures.

The NJDPB will make a preliminary determination

of whether the order is qualiﬁed, generally within 60

days of receipt, and will notify each interested par-

ty in writing of its decision. If the NJDPB determines

that the order is not qualiﬁed, the interested party

may obtain a modiﬁcation of the order and resubmit

it for review.

IMPLEMENTATION

QDROs are implemented only when the member

retires and elects to receive a monthly beneﬁt, or

when the member terminates participation in his or

her respective retirement system and applies for a

withdrawal of his or her net personal contributions. If

a DRO is received for a participant who has already

retired, it can be implemented upon approval and Or-

der of the Court.

It is the responsibility of the member to provide the

NJDPB with copies of all court orders as well as to

comply with the provisions of the court orders.

A DRO cannot direct the State to implement any pro-

vision that would conﬂict with Statute or regulation

governing administration of the retirement systems,

nor can the beneﬁt(s) payable to alternate payee(s)

exceed the net beneﬁt available to the participant.

The former spouse/partner does not obtain all of the

rights of a member under the provisions of a QDRO.

However, if the DRO is deemed qualiﬁed, the former

spouse/partner does receive the right to receive a

portion of the member’s monthly retirement beneﬁts

until either (a) he/she or the member dies, or (b) the

NJDPB receives another court order that modiﬁes or

nulliﬁes the previous QDRO. The former spouse/part-

ner’s right to receive a portion of the retiree’s monthly

retirement allowances cannot be assigned or be-

queathed to anyone else or to the former spouse/

partner’s estate.

If the former spouse/partner predeceases the

retiree, the withholdings under the QDRO will revert

Page 3 March 2019 Fact Sheet #83

Qualiﬁed Domestic Relations Order (QDRO)

This fact sheet is a summary and not intended to provide all information.

Although every attempt at accuracy is made, it cannot be guaranteed.

back to the retiree. When the retiree dies, all with-

holdings will terminate. However, in those systems

that permit the member to name survivor beneﬁcia-

ries, the former spouse/partner could receive survi-

vor beneﬁts in such situations even though the with-

holdings under the QDRO will terminate; the member

would have had to name the former spouse/partner

as the beneﬁciary for the survivor pension beneﬁts

— either voluntarily or by court order — at the time

of selection of a survivor’s beneﬁt on the retirement

application.

Generally, the NJDPB will only implement QDROs on

a prospective basis. Arrears or retroactive withhold-

ings are not automatic; however, if a request for such

arrears or retroactive withholdings is speciﬁcally re-

quired within the QDRO, such arrears or retroactive

withholdings can be implemented. The QDRO must

state the amount of the regular withholdings plus the

additional amount of the arrears withholdings plus

the balance of the outstanding arrears balance.

LIMITATIONS

The normal pension beneﬁts to the member cannot

be increased as a result of the provisions appear-

ing within a QDRO. There are no lump-sum retire-

ment beneﬁts available to the member or the former

spouse/partner under the provisions of a QDRO.

Retirement Survivor Beneﬁts

PERS, TPAF, and JRS — If the member retires and

designates his or her spouse/partner as the beneﬁ-

ciary under one of the various survivor options avail-

able, and is then divorced from that named beneﬁ-

ciary, the former spouse/partner will remain as the

beneﬁciary for those survivor beneﬁts.

PFRS and SPRS — A divorce will void the former

spouse/partner’s eligibility to receive monthly sur-

vivor beneﬁts. The laws governing the PFRS and

SPRS state that only the man or woman to whom the

retiree is married or in a civil union on the date of his

or her death is eligible to receive a monthly survivor

beneﬁt from the retirement system.

Group Life Insurance

In cases of divorce or dissolution, even if your retire-

ment application indicates your former spouse/part-

ner and/or relatives of your former spouse/partner as

beneﬁciaries for life insurance, they cannot receive

the beneﬁt. The proceeds from your life insurance

policy become payable upon your death to your re-

maining primary beneﬁciaries (if any), contingent

beneﬁciaries (if any), or your estate. However, the

following exceptions will be honored and considered

valid:

• Courtordersareledthatspecicallydesignate

your former spouse/partner to receive a life in-

surance beneﬁt; or

• You le aDesignation of Beneﬁciary form after

the ﬁnal date of judgment that names your for-

mer spouse/partner and/or relatives of your for-

mer spouse/partner as life insurance beneﬁciary.

The court order must speciﬁcally state that a mem-

ber must designate the former spouse/partner for the

group life insurance beneﬁt offered by the employer,

and this designation must be made after the date of

the divorce. If there is no speciﬁcity as to the em-

ployer’s group life insurance or the designation is not

made after the divorce, the NJDPB cannot honor the

designation.

For more information see the Divorce, Dissolution of

a Civil Union, and Retirement Beneﬁts Fact Sheet.

SPECIAL CONDITIONS FOR

DEFINED CONTRIBUTIONS ACCOUNTS

The NJDPB administers the DCRP and the

NJSEDCP.* Speciﬁc wording is required in the QDRO

in order for the NJDPB to accept and implement it for

these plans:

• Inordertobeacceptableforimplementation,a

DRO involving the DCRP or the NJSEDCP must

state that “The New Jersey Division of Pensions

& Beneﬁts” is to withhold a speciﬁc dollar amount

or a speciﬁc percentage of the balance within the

participant’s account as of the “end of a month”

for either equitable distribution, alimony, or sup-

port payments to the alternate payee.

– The wording concerning “The New Jersey

Division of Pensions & Beneﬁts” is necessary

to create a clear obligation upon the NJDPB to

implement the requested decision.

– The wording concerning the percentage with-

holdings based on an “end of a month” is nec-

essary because the value of the accounts is

usually calculated at the end of a month.

After the NJDPB deems a DRO qualiﬁed, it will at-

tempt to segregate the speciﬁc dollar amount or spe-

ciﬁc percentage requested within such QDRO within

the participant’s account as soon as practical there-

after. Once the segregation within the account is

made, the former spouse will have total control over

those funds as to investment decisions, allocations,

etc. The participant will only have control over the re-

mainder of the funds within that account.

* Local employers (i.e., municipalities, counties, boards of education, etc.) may offer deferred compensation plans to their employees, but the NJDPB is not part of the administration of such local

plans. The laws and regulations governing these types of plans may differ from the laws and regulations governing the NJSEDCP, and their procedures for implementing QDROs may be different

than those policies and procedures concerning the NJSEDCP.

Fact Sheet #83 March 2019 Page 4

Qualiﬁed Domestic Relations Order (QDRO)

This fact sheet is a summary and not intended to provide all information.

Although every attempt at accuracy is made, it cannot be guaranteed.

ADDITIONAL INFORMATION

For additional information about your beneﬁts and di-

vorce or dissolution of a civil union, see the Divorce,

Dissolution of a Civil Union, and Retirement Beneﬁts

Fact Sheet.

This fact sheet has been produced and distributed by:

New Jersey Division of Pensions & Beneﬁts

P.O. Box 295, Trenton, NJ 08625-0295

(609) 292-7524

For the hearing impaired: TRS 711 (609) 292-6683

www.nj.gov/treasury/pensions

Page 5 March 2019 Fact Sheet #83

Qualiﬁed Domestic Relations Order (QDRO)

This fact sheet is a summary and not intended to provide all information.

Although every attempt at accuracy is made, it cannot be guaranteed.

SAMPLE

NEW JERSEY DIVISION OF PENSIONS & BENEFITS

SAMPLE MATRIMONIAL ORDER

A. Where a SPECIFIC DOLLAR AMOUNT has been resolved:

The NJDPB is to withhold the amount of $412.18 [OR ANY OTHER STATED AMOUNT]

from John Doe’s gross monthly retirement allowances for [either: alimony, support, or

equitable distribution – indicate only one] payments to Ms. Flossie Doe.

B. Where a SPECIFIC PERCENTAGE has been determined:

The NJDPB is to withhold 42 percent (42%) [OR ANY OTHER AGREED UPON PER-

CENTAGE] of John Doe’s gross monthly retirement allowances for [either: alimony,

support, or equitable distribution – indicate only one] payments to Ms. Flossie Doe.

C. Where a SPECIFIC PERCENTAGE has been determined but the member is still an

active employee and the monthly retirement allowance cannot be determined at the

present time:

The NJDPB is to withhold from John Doe’s gross monthly retirement allowances for

[either: alimony, support, or equitable distribution – indicate only one] payments to Ms.

Flossie Doe an amount to be computed by multiplying the gross monthly retirement

allowance by 42 percent (42%) [OR ANY OTHER AGREED UPON PERCENTAGE]

and a coverture fraction in which the numerator will be the total number of years that

the spouses were married while the member was a member of the retirement system

[THAT SPECIFIC NUMBER OF YEARS AND MONTHS MUST BE STATED IN THE

ORDER, such as 26 years and three months] and the denominator will be the total

years of service credit accrued within the retirement system at the time of retirement

[THIS ACTUAL FIGURE WILL BE UNKNOWN AT THE TIME OF THE PREPARATION

OF THE COURT ORDER].

NOTES: The withholdings mentioned in such orders will be sent directly to the divorced

spouse unless the order speciﬁes another payee such as a probation department.

• UponthedeathofEITHERtheretirantorthedivorcedspouse,allwithholdingsmandat-

ed under such a court order will be terminated. In those retirement systems that permit

the member to select a survivor’s retirement option at the time of his or her retirement,

the equitable distribution withholdings will still terminate upon the death of the retirant

but, if the divorced spouse is designated as the beneﬁciary under the survivor’s re-

tirement option and survives the retirant, such divorced spouse who was designated

as the survivor’s option — either voluntarily by the member or by court order — can

receive monthly survivor’s beneﬁts for the rest of his or her life after the death of the re-

tirant. Those beneﬁts do not arise from the equitable distribution court order but rather

arise from the rights of a designated beneﬁciary under a survivor’s retirement option.

• Ifanotherpersonreceivesmonthlysurvivor’sbenetssubsequenttothedeathofthe

retirant under a retirement option selected by the retirant, the divorced spouse cannot

receive continued equitable distributions from the monthly survivor’s beneﬁts payable

to that other person.