Kelly v. Kelly, NO. 2012-CA-001081-MR (Ky. App. 2014)
When There is No QDRO, Income Tax Liabilities and Reporting Obligations Must Be Negotiated, Allocated and Structured Between the Parties

Rendered: August 29, 2014
Not To Be Published
Opinion Reversing

To: Domestic Relations Attorneys on BOTH Sides of the River
Re: I’m Sorry, and You’re Welcome

Let me start by saying, if you hate QDROs, I wager that this post will help you see QDROs through a more affectionate lens….

To that end, qualified ERISA-based plans should be your preference when assigning retirement benefits to a former spouse. In fact, a red flag should go up whenever you encounter a plan that is not governed under ERISA. Importantly, non-ERISA plans are subject to their own set of rules that may limit or even prohibit the assignment of benefits to a former spouse. 

For attorneys in Ohio and Kentucky, there are certain retirement plans out there you should be on the lookout for that are “non-ERISA” and/or “non-qualified”.  THESE PLANS MAY NOT BE ABLE TO BE DIVIDED VIA QDRO OR SIMILAR COURT ORDER. For instance, if your client (or his/her spouse, or former spouse) has a retirement plan with the City of Cincinnati, listen up. City of Cincinnati pension benefits cannot be divided by QDRO. The same may be true if one of the parties is an executive with Procter & Gamble, or General Electric, to name only  a very few local employers with supplemental executive retirement plans. 

You are thinking, “What’s the big deal Eileen?” That is because you are ahead of the bell curve. You are one of the lucky who discovered pre-decree that you could not divide the pension via QDRO. You were able to instead negotiate an alternative equitable distribution of the pension; perhaps an offset with the parties’ much coveted rare, mint condition first edition Princess Diana Beanie Baby collection. You saved yourself and your client a lot of time, money, and heartache by not simply having the parties sign off on a property agreement “splitting the pension via QDRO”, only later to find out post-decree that the pension could not be divided via QDRO. I bet you were a ‘hand-raiser’ in law school too. As for the rest of us...

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