The Differences Between QDRO and QILDRO
A Qualified Domestic Relations Order (QDRO) and a Qualified Illinois Domestic Relations Order (QILDRO) are legal tools used to divide retirement benefits during a divorce. Still, they each carry specific applications and requirements.
Starting with a QDRO, a type of domestic relations order that either creates or recognizes an alternate payee’s right to receive a portion of the benefits payable to a participant under the retirement plan. The order is used to enforce a trial court’s previous judgment entry of divorce or dissolution of marriage and must comply with ERISA and the Internal Revenue Code. Further, a QDRO is required to list specifically[1]:
The name and the last known mailing address for both the plan participant and each alternate payee that is covered by the order,
The amount or percentage of the plan participant’s benefits are to be paid to each alternate payee or the methodology used to determine the amount or percentage,
The total number of payments or the period that the order applies to, and
Every plan that such an order applies to.
Additionally, QDROs are exempt from the specific pension plan’s anti-alienation provision and ERISA’s general preemption clause.[2] Furthermore, QDROs are used nationwide. They must comply with federal laws, which makes them applicable to private-sector retirement plans that ERISA covers.
Contrastingly, a QIDRO is specific to Illinois and is governed by Illinois state law rather than federal law. An Illinois court order creates or recognizes the alternate payee’s right to receive a portion of a plan member’s accrued benefits. Further, a QILDRO must comply with the Illinois Pension Code and the Illinois Marriage and Dissolution of Marriage Act.[3] Additionally, QILDROs do not need to meet the requirements of §414(p) of the Internal Revenue Code, and they are not intended to be interpreted in the same manner.[4] The information required in a QILDRO is “the name, mailing address, and social security number of the member and of the alternate payee and must identify the retirement system to which it is directed and the court issuing the order.”[5] Furthermore, QILDROs require the member’s written consent if the member began participating in the retirement system before July 1, 1999.[6] Lastly, QILDROs do not “apply to or affect the payment of any survivor’s benefit, disability benefit, life insurance benefit, or health insurance benefit.”[7] QILDROs often require a second order known as a QILDRO Calculation Court Order to determine the specific amount or percentage of benefits to be paid to the alternate payee.[8]
In summary, one of the key differences between the two orders is their jurisdictional application. Since QDRO is governed and applied nationwide, it must comply with federal laws and applies to private-sector retirement plans. QILDRO is specific to Illinois and only applies to public retirement plans within the state and is not subject to ERISA. This is a crucial distinction because depending on the type of pension plan being addressed in a divorce, either a QDRO or QILDRO is the proper tool to divide the assets. Further, for QILDROs, you will likely need two orders: the QILDRO itself and the QILDRO Calculation Court Order. For the QDRO, you only need it.
[1] See 29 USCS § 1056 (d)(3)(C), See 3 Valuation and Distribution of Marital Property § 47A.03 IRS Sample Language for QDRO, Internal Revenue Bulletin 1997-2 at p.49.
[2] See Boggs v. Boggs, 520 U.S. 833, 846
[3] See 40 ILCS 5/1-119(a)(6)
[4] Id. (Precisely the requirements of that Section’s paragraphs (2) and (3)).
[5] See 40 ILCS 5/1-119(c)(1).
[6] See 1 Gitlin on Divorce §8-14(b)(12)(A).
[7] See 40 ILCS 5/1-119(b)(4).
[8] See 1 Gitlin on Divorce §8-14(b)(12)(A).