QILDRO v. QDRO
According to Illinois Statute 750 ILCS 5/503(b)(2), all pension benefits obtained by either spouse after the marriage and before the dissolution of the marriage are presumed to be marital property, making them divisible in divorce proceedings. To divide pension benefits between the parties, Illinois courts must order either a QDRO (Qualified Domestic Relations Order) or a QILDRO (Qualified Illinois Domestic Relations Order). Though they sound similar in name, their effect is not.
A QDRO is a court order which recognizes the existence of an alternate payee’s right to receive all or a portion of the benefits payable to a participant of a retirement plan. This allows for a court or judgement to pay child support, maintenance, or marital property rights to a spouse, former spouse, or other dependent of a participant from a retirement plan. However, a QDRO may not award an amount that is not available under the plan.
A valid QDRO has four elements: (1) the name and mailing address of the participant and any alternate payees, (2) the amount or percentage of the participant’s benefits to be paid to each alternate payee, (3) the name of each plan to which the order applies, and (4) the number of payments or the time period to which the order applies.
A spouse or former spouse who receives QDRO benefits from a retirement plan reports the payment they receive as if they were a plan participant themselves, and a QDRO distribution paid to a child is taxed to the plan participant. A QDRO can assign survivor benefits by a pension plan for the participant’s spouse, creating an independent interest in the former spouse.
Not all retirement plans are qualified plans divisible by a QDRO. Federal and state governmental pensions in particular are not divisible under a QDRO. Federal plans are generally administered by the Civil Service Retirement System, and individual states, such as Illinois, often have their own pension plan allocation systems such as QILDRO.
A QILDRO is an Illinois court order that directs the State Employees’ Retirement System (SERS) to pay a designated portion of a member’s retirement benefits to an alternate payee, as stated in 750 ILCS 5/503(b)(2) of the Illinois Marriage and Dissolution of Marriage Act.
The biggest difference between a QDRO and a QILDRO is that while a QDRO can assign survivor benefits, a QILDRO terminates on the participant’s death and the former spouse only receives benefits when they are paid to the participant. If the participant dies while still employed, the former spouse will never receive benefits. QILDROs do not apply to death or survivor benefits unless a former spouse is assigned part of the death benefit which would be a lump sum payment rather than a periodic benefit. Neither disability benefits nor health insurance can be reached through a QILDRO.
If you have questions about receiving pension benefits as an alternate participant, please contact us at THE LAW OFFICES OF VAN A. SCHWAB. We are dedicated to helping you make the best decisions to protect your interests. Contact us at our Skokie, Libertyville, or Chicago offices to learn more about either a QDRO or a QILDRO. Reach us at (847) 851-4373 (Skokie office), (312) 372-4569 (Chicago office), (847) 851-4373 (Libertyville office) or at schwabfamilylaw@gmail.com.