A QDRO expert can be an extremely valuable member of your legal team, whether your case is ultimately settled or tried. He or she can assist in pretrial discovery on such issues as the nature and extent of the opposing party's employee benefits, pension plan features (including when payment will become available), survivorship rights, and a host of other issues.
Family Advocate: Outstanding Financial Experts (Buy Issue)Qualified domestic relations orders or "QDROs" are the bane of many divorce lawyers' existence. They require an understanding of two completely separate and often conflicting sets of laws: matrimonial law on property division, alimony and child support, and federal and state laws affecting pensions, including the Employee Retirement Income Security Act (ERISA) and comparable laws governing military retired pay (the Uniformed Services Former Spouses' Protection Act) and civil service retirement systems. ERISA and other pension laws are full of arcane jargon, complex language, and pitfalls for family law attorneys. QDROs are not a simple subject—the leading treatises on QDROs run to several hundred pages.

QDRO experts for settlement and trial

Knowing the extent of each party's employee benefits and when and how they can be divided is an essential component of your legal services in any divorce case. Retain your QDRO expert as early in the case as possible to assist in understanding pensions revealed in discovery and to provide information and support throughout the case as you re?ne your settlement and litigation strategies.

Unlike experts in other areas whose services will no longer be needed if the case is settled, QDRO experts are likely to continue to be involved to draft a QDRO that accurately reflects the terms of the settlement. A skilled expert can transform provisions of your separation agreement into a QDRO that will not only be accepted by the plan but also accurately implement provisions of your agreement, and where the agreement is silent or ambiguous, draft the QDRO in the manner most favorable to your client.

When cases are litigated, a QDRO expert will testify to the many issues that arise in pension division cases, which number more than 50 and are listed below by categories of plans.

General pension issues

  • Advantages and drawbacks of a QDRO or comparable order versus present valuation calculation and immediate offset award method, including allocation of risk of nonsurvival.

  • Nature and extent of pensions and employee benefits in the case.

  • Availability and cost of survivor benefits.

  • Effect of QDRO award to former spouse alternate payee on rights and financial position of current or future spouse of participant.

  • Personal obligation of the participant to pay the alternate payee an assigned share of benefits during the qualification process or if plan makes erroneous payments.

  • Consistency and correlation of QDRO provisions with the express provisions of the underlying separation agreement or divorce decree.

  • Propriety of QDRO clauses addressing issues not expressly set forth in the underlying separation agreement or divorce decree.

  • Explanations as to why the terms and conditions of your proposed QDRO are superior to the other side's proposed QDRO.

  • Tax aspects of QDRO division.

  • Use of QDRO to collect alimony or child support in addition to QDROs for property division.

  • Legal malpractice risk to lawyer for failure to draft or present QDRO to plan or for errors in QDRO language.

  • Standard of care in legal malpractice actions.

ERISA (corporate) defined contribution plans

(401(k), 403(b), Employee Stock Ownership Plans (ESOPs), and similar plans)

  • Division of vested and unvested benefits.

  • Division by dollar amount or percentage.

  • Adjustment of alternate payee's assigned benefit for investment experience (interest, dividends, gains, and losses) from the date of division ( i.e., separation or divorce) to the date of the plan's payment of the award to the alternate payee.

  • Treatment of employee loans secured by participant's account balance in dividing the plan account.

  • Inclusion or exclusion of pro-rata share of year-end employer contribution.

  • Allocation of tax basis between the parties.

ERISA (corporate) defined benefit plans

(traditional pension plans)

  • Allocation of nonmarital benefits to participant by either division of entire accrued benefit at date of separation or divorce or use of the coverture fraction method. Pros and cons of each approach.

  • Commencement of payments to alternate payee before participant's retirement.

  • Termination of alternate payee's payments on participant's or alternate payee's death.

  • Survivor benefits for alternate payee in the event participant predeceases alternate payee.

  • Reversion of alternate payee's award to participant if alternate payee predeceases participant.

  • Effect of plan insolvency and Pension Benefit Guaranty Corporation takeover of plan on the rights of each party.

  • Division of early retirement subsidy between parties.

  • Existence and division of "nonqualified" plans.

Military retired pay

  • Special federal jurisdictional issues (10-year marriage overlap with creditable service, jurisdiction of state divorce court).

  • Broad and narrow definitions of "disposable retired pay."

  • Automatic reduction of former spouse's award if servicemember elects to receive disability payments; state law remedies for such reductions.

  • Freezing rank and years of service at date of separation or divorce to establish hypothetical level of disposable retired pay.

  • Survivor Benefit Plan (SBP):

    —Preclusion of award to current spouse if awarded to former spouse;

    —Cost and allocation of responsibility for costs;

    —Termination of eligibility if former spouse remarries prior to age 55.

  • Allocation of postretirement Cost of Living Adjustments (COLAs) between the parties.

  • Alternative methods of dividing military retired pay when marriage overlaps creditable military service by less than 10 years.

  • Difference between active duty pensions and National Guard or Reserve pensions:

    —Time payments commence;

    —Calculation of marital and nonmarital shares by points, rather than years of creditable service.

Federal Civil Service (FERS/CSRS) plans

  • Division of "self-only," "gross," or "net" annuity in Court Order Acceptable for Processing (COAP).

  • Former Spouse Survivor Annuity (FSSA):

    —Cost and allocation of responsibility for costs;

    —Termination of eligibility if former spouse remarries prior to age 55.

  • Barring refunds of employee contributions.

  • If former spouse predeceases federal employee, do former spouse's payments revert to employee or are they paid to employee's children?

  • Allocation of postretirement COLAs between the parties.

  • FERS/CSRS presumptions and standard interpretation of certain COAP terminology.

Thrift savings plans (defined contribution plan similar to 401(k) for federal civilian and military employees)

  • Division of vested and unvested benefits.

  • Division by dollar amount or percentage.

  • Adjustment of former spouse's assigned benefit for investment experience (interest, dividends, gains, and losses) from the date of division ( i.e., separation or divorce) to the date of payment to former spouse.

  • Treatment of employee loans secured by participant's account balance in dividing the plan account.

  • Allocation of tax basis between the parties.

Railroad Retirement Act benefits

  • Division of non-Tier I benefits.

  • Phrasing the order to include or exclude postretirement COLAs on former spouse's award.

  • Eligibility of former spouse for divorced spouse survivor annuity and termination of eligibility by remarriage.

State, county, and municipal plans

  • Are QDRO-like orders available for plan under relevant state law? If not, what alternative division mechanisms are available?
  • Particular features of the state, county, or municipal plan at issue.

  • Allocation of future COLAs.

  • Effect of postretirement deferred receipt (TERI) programs on rights of former spouse.

Other pension and retirement plans

  • Special plans for certain federal employees (Department of State, Central Intelligence Agency, National Security Agency, etc.).

  • Multination organizations' pension plans (i.e., United Nations, World Bank, and International Finance Corporation employees).

  • Foreign pensions, governmental and private.

Attorney, accountant, or actuary?

In most QDRO cases, an accountant or actuary is not a proper expert witness or consultant. A common misconception is that the testifying expert must be an accountant or actuary (an expert on numbers) rather than a fellow attorney (an expert on the legal aspects of pensions and the drafting and interpretation of legal documents). Remember that a QDRO is a "qualified domestic relations order." As an order, a QDRO is a sophisticated legal document that may be drafted or interpreted only by someone skilled and educated in the law and the drafting and interpretation of legal documents—in other words, an attorney experienced in pension law. You would not hire a CPA to draft a motion, or retain an actuary to advise you on jurisdiction. Accountants and actuaries have mathematical skills and training that are useful in many contexts, but drafting or testifying about QDROs is not one of them.

Pension valuations versus QDROs

There is only one situation in which to consider retaining an accountant or actuary as an expert. When an employee is going to "cash out" the nonemployee spouse's interest in the employee's pension, an accountant or actuary should testify as to the "present value" of the future pension rights. This is a fairly simple mathematical calculation involving future monthly benefits to be paid by the plan, life expectancies of the parties, interest rates, and the expected retirement age. However, this calculation does not involve the use of a QDRO because the nonemployee spouse's interest will be bought out by the employee. Thus, by definition, no QDRO will be necessary.

In this situation, an actuary is a more credible expert than an accountant. The main difference between an actuary and an accountant is that while both deal with financial issues an actuary deals with the probability of certain future events, whereas an accountant generally deals with the accurate recording of past financial transactions. Actuaries' skills and formal training thus lie in the realm of economics, statistics, probability, and other branches of mathematics. An accountant or actuary may testify as to the estimate of the present value of a stream of future pension payments, as that is a purely mathematical issue. In these circumstances, a QDRO is not required.

However, the most valuable and qualified QDRO expert will be an attorney. Because QDROs are legal documents, only a qualified attorney may properly serve as a QDRO expert. Actuaries and accountants have no formal training in the law or in the drafting or interpretation of legal documents such as QDROs. While actuaries may be involved in pension plan design and administration, the plan's significant legal documents, such as the text of the plan itself, the summary plan description, the written QDRO procedures as required by Section 206(d)(3) of ERISA, and the plan's model QDROs are drafted and interpreted by employee benefits attorneys, not actuaries. Actuaries recognize that their role in the QDRO process is extremely limited and that they cannot take the place of an attorney in providing expert testimony. Actuarial Standard of Practice No. 34 (September 1999), promulgated by the Actuarial Standards Board (the national professional association and regulatory body for actuaries) states:

The actuary should be familiar with the rules regulating the practice of law in the jurisdiction where the actuary will be rendering the services and should avoid the unauthorized practice of law. For example, normally it would be inappropriate for the actuary to advise a non-attorney whether a draft court order meets applicable procedural requirements to be a valid order in the jurisdiction. It would, however, be appropriate for the actuary to advise whether…each party's benefit is definitely determinable from the order…. The question of whether the proposed order meets the state's procedural requirements is a legal one and is beyond the qualifications of actuaries who are not also attorneys. The actuary's opinion as to whether a DRO is a QDRO or satisfies such other requirements as may apply to the specific type of court order and retirement plan should clearly state the scope of such opinion. For example, if the opinion is limited to an examination of the technical content of the order and does not extend to the legal form of the order, the opinion should so state. If the actuary's opinion is intended to cover both the technical content and the legal form of the order, the actuary should beware of possible unauthorized practice of law.
Sections 3.2.4 and 3.7.1, emphasis added.

When confronted with an actuary retained by the other side as a "QDRO expert," respond with the language quoted above. Actuaries and accountants who draft QDROs or offer expert testimony on their drafting or interpretation violate the prohibition against the unauthorized practice of law. Although the definition of "unauthorized practice of law" varies from state to state, as noted in Rule 5.5 of the ABA Model Rules of Professional Conduct, typical definitions include the following:

The "practice of law" means the preparation of a pleading or other document incident to an action…on behalf of a client before a judge in court as well as a service rendered out of court, including the giving of advice or the rendering of any service requiring the use of legal skill or knowledge, such as preparing a will, contract, or other instrument, the legal effect of which under the facts and conclusions involved must be carefully determined.
Texas Gov't Code § 81.101(a), emphasis added.


[T]he practice of law includes preparing any document in any medium intended to affect or secure legal rights for a specific person or entity…preparing any document through any medium for filing in any court [as a QDRO must be], administrative agency or tribunal for a specific person or entity; or negotiating legal rights or responsibilities for a specific person or entity.
Ariz. Sup. Ct. R. 31(a)2A, emphasis added.

Any actuary or accountant who purports to testify to the legal effect or interpretation of the language of a "qualified domestic relations order" is not qualified to do so and can probably be barred by a motion in limine just prior to his or her testimony for the reasons stated above.


Retain your QDRO expert as early as possible to assist with pretrial discovery as well as the negotiations or litigation of a family law case involving a pension plan. Make sure your QDRO expert is a qualified pension attorney, unless the only issue in the case is the present value of future pension payments, in which case the services of an accountant or actuary may be useful. Make sure your QDRO expert is prepared to testify about all of the issues listed above and to assist you in drafting a QDRO at the conclusion of the case, regardless of whether the case is settled or tried. FA

David Clayton Carrad is an attorney and President of QDRO Solutions, Inc., a nationwide consulting firm that drafts QDROs for divorce lawyers. He frequently testifies as an expert in QDRO cases and is the author of The Complete QDRO Handbook (2d ed. 2004), published by the ABA Section of Family Law.

Published in Family Advocate, Volume 29, No. 4, Spring 2007. © 2007 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.