7.9 Pension-based Awards

• Library: Virginia Family Law: A Systematic Approach (Virginia CLE) (2018 Ed.)

7.9 PENSION-BASED AWARDS

7.901 In General. In addition to the monetary award made pursuant to subsection (D) of section 20-107.3 and after considering the factors set forth in subsection (E) of that section, the court may direct payment of a percentage of the portion of any pension, profit-sharing or deferred compensation plan, or retirement benefits, whether vested or nonvested, that constitutes marital property and whether payable in a lump sum or over a period of time. The court may need to examine the nature of the property to determine whether it constitutes a pension or a profit-sharing, deferred compensation, or retirement plan. ¹¹⁴

In order for a spouse to receive a distribution, the trial court must enter an order directing the plan administrator to make payments to the nonparticipating spouse. The court has continuing jurisdiction to make such orders, even after 21 days following entry of the final order in the case, for the purpose of effectuating the final order. The continuing jurisdiction does not permit the court to alter critical terms of the equitable distribution order. ¹¹⁵ If the parties no longer reside in the jurisdiction of the circuit court that entered the divorce decree, that court may transfer to the circuit court where either party resides the authority to make additional orders under section 20-107.3(K) of the Virginia Code or to carry out or enforce any agreement that was incorporated into its decree under section 20-109.1. ¹¹⁶

The administration of the pension, deferred compensation, or retirement plan is governed by law, and plans that qualify under the Employee's Retirement Income Security Act of 1974 (ERISA) can distribute funds to the nonparticipating spouse only if a qualified domestic relations order (QDRO) is entered that allows the plan administrator to distribute the funds.

Some plans, such as the Virginia Retirement System, are exempted from the QDRO requirements of ERISA. A nonqualifying plan still may require an "approved domestic relations order" (ADRO) to allow the plan administrator to distribute benefits to a nonparticipating former spouse.

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The following government publications may help family law practitioners understand this area of law:

1.	The Pension Benefit Guarantee Corp. (PBGC), which administers some defined benefit plans after they are terminated, publishes "Qualified Domestic Relations Orders and PBGC." This booklet contains a checklist that PBGC uses to ensure that proposed QDROs meet statutory requirements as well as two model QDROs. 117
2.	IRS Notice 97-11 is intended to help attorneys draft and review QDROs. It provides sample QDRO language recommended by the IRS. It also discusses issues concerning the form and timing of payments to the nonpar-ticipating spouse and the treatment of survivor benefits if the participant dies. 118
3.	The Labor Department has published "QDROs—The Division of Pensions Through Qualified Domestic Relations Orders," which addresses several of the same questions addressed in the other publications. 119

A family law practitioner without substantial experience in this area should affiliate with an expert, at least for several cases, until the family law practitioner gains sufficient expertise to draft qualified domestic relations orders independently.

7.902 Qualified Domestic Relations Orders. ERISA governs many forms of retirement benefits. The pension or retirement benefits are often referred to as the "plan," and the employee who owns the plan is referred to as the "participant."

ERISA generally prohibits the alienation or assignment of a participant's benefits to a third party. When a state court enters a divorce decree in which retirement benefits are transferred from the...