In providing this overview and the attached prototype for Qualified Domestic Relations Orders (QDROs), TIAA-CREF is not providing legal, tax or investment advice, and will not be held liable for errors or omissions in QDROs received.
Please review all materials with counsel.
Overview: Different stages of the retirement experience require different approaches as do the various types of obligations the QDRO is being devised to satisfy. In general, these materials contemplate a marital property distribution of significant accumulations in the pre-payout (deferred annuity) stage.
See Part 3 for contracts in payout (immediate annuity) status, and for accumulations where preserving tax deferral is not the driving concern. See Part 4 for child support /alimony obligations. Interests in IRAs can be distributed by the divorce decree, however the law requires the obtaining of a separate court order "QDRO" to distribute interests in employer sponsored retirement plans. The following frequently asked questions are separated into questions more frequently asked by the participant or the non-participant spouse (alternate payee), but all sections should be reviewed by both.
Does notice to TIAA-CREF that a property distribution proceeding is pending act as an automatic restraint on the participant’s rights e.g. right to transfer, or cash withdrawals if available; right to select a payout option; right to take loans or change a beneficiary? How do these activities impact the implementation of the QDRO?
Payout Annuity Contracts principally fall into one of the following categories:
Life annuity contracts — a "stream of payments" type QDRO can be implemented. Alternate payees can be established for income during the life of the participant and for the death benefits, but the measuring lives remain the same.
Transfer Payout Annuity (TPA), Minimum Distribution Option (MDO), Interest Only (IO) payment contracts — for these types of contracts a separate interest TPA, IO, or MDO QDRO can be used if the parties wish to individually exercise the other payment options available under the rules of the plan. However, if the parties only wish to divide the stream of payments, the annuity income QDRO may be used. In both cases, a percentage is required to reflect the fact that the income will change over time.
MDO (Required Minimum Distribution Option)
Contracts may be split respectively. Since the payment amounts are set at the beginning of each year, the parties must divide the payments, for the calendar year of receipt of the QDRO, amongst themselves and arrange tax reporting accordingly.
1The Retirement Act, among other things, essentially requires spousal consent for any action that would reduce the amount available to a surviving spouse to less than 50 percent of the retirement annuity accumulation. This Act does not apply to all annuity contracts accumulations and inquiry should be made to determine whether updating the beneficiary designation while the divorce is pending is feasible.
Please note: TIAA-CREF will not be held responsible for errors and omissions on the part of the participant and legal counsel. Additionally, TIAA-CREF cannot be held responsible for any transaction the participant has executed, such as cash withdrawals, transfers and/or a conversion from a Deferred Annuity contract to an Immediate Annuity contract, prior to the receipt of a valid QDRO.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
The tax information in this page is not intended to be used, and cannot be used, to avoid possible tax penalties. Neither TIAA-CREF nor its affiliates offer tax or legal advice. Taxpayers should consult an independent tax advisor or attorney for advice based on their own particular circumstances
© 2013 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017