Kelly V. Zarcone, Esq.

The information presented herein is provided as educational materials and should never be construed as legal advice.  The seminar below was conducted for New York financial professionals and attorneys only and does not apply to Florida or any other state.

Kelly V. Zarcone QDRO Seminar - Erie County NY 2016


The information presented herein is provided as educational materials and should never be construed as legal advice.  The seminar below was conducted for New York financial professionals and attorneys only and does not apply to Florida or any other state.

When details count, count on Us!

  With a background in pension tax and ERISA, Kelly V. Zarcone has written thousands of QDROs and can make sure your rights are protected throughout the process of obtaining funds from a former spouse's 401(k) or pension. If a Qualified Domestic Relations Order is about to be filed against your benefits, we will make sure that your former spouse gets that to which he or she is entitled, not more. This area of law is generally regarded as complex because it deals with Federal Tax and ERISA Law as well as state law.  For example, the law regarding how a QDRO should be drafted in Florida is different from New York using the same words in a Settlement Agreement.  The law is filled with landmines in this area, trust experience and dedication.

Qualified Domestic Relations Orders


by:    Kelly V. Zarcone, Esq.

    Brenon, Lipman & Zarcone, LLP

    5500 Main Street, Suite 201

    Williamsville, New York 14221

    Direct Line: 716-854-8002

    Direct Fax  716-693-5775

Qualified Domestic Relations Orders

1.)    What you need to know about QDROs

    a.    What is a QDRO?

         A QDRO is a Qualified Domestic Relations Order which is used to divide retirement plans (pension and 401(k)) subject to ERISA (The Employee Retirement Income Security Act of 1974 & amendments).  A QDRO is not effective against government plans.  State plans require Domestic Relations Orders (they hate it when you put the word “Qualified” in there), Federal Plans use Court Order Acceptable for Processing (COAP) and the military uses a Military Pension Division Order.  

    b.     Why is it necessary?  

         Non government plans - private employer retirement plans (pension, 401(k), profit sharing, etc.) generally hold and grow pre-tax money without the plan participant having to pay tax on the gain.  Awesome - right?  With such cool things come many rules - tax rules.  If a Plan does not abide by the rules, it may lose its tax deferral benefits.  One of those rules is that money in a retirement account or plan is not available to creditors.  What is a former spouse if not a super creditor?!  The tax code was changed in the early 1980s to allow a plan to pay a former spouse but - as will all tax rules - it must be “Qualified.”  

         Other government retirement plans followed suit in allowing these special orders for divorced people for public policy reasons.  However, we are not able to split the pension type payments paid to New York Volunteer Firefighters by a DRO or QDRO - it just can not be done. ☹ (Professional firemen are under the NYSLRS system though.)

    b.    The difference between a shared interest pension benefit and a separate interest pension benefit is critical for reasons we will discuss.

        i.    Shared interest - Part of each and every payment made to the employee spouse.  Stops at the death of the employee spouse.  Non employee spouse share reverts back to the employee spouse if the non employee spouse predeceases.  

        ii.    Separate interest - Split the accrued benefit and allowed to take the non employee share as a lift annuity.  No post retirement survivor benefits necessary.  Down side is that the benefit is gone from the employee spouse forever in the event the non employee spouse predeceases him or her.

2.)    Common questions or misconceptions about QDROs.

    a.    Many people believe that they have to wait until the employee spouse actually retires before submitting an Order.  Doing so can have disastrous results.  We will discuss some of the ways waiting to prepare a QDRO can hurt one or both parties.

    b.    For private pension plans (GM, Ford, Moog, etc.) and 401(k) type plans, there is no requirement that a divorce actually be complete before a QDRO is entered and accepted.  We will discuss some of the situations where this will be helpful.

    c.    A QDRO is not used to split an IRA account.  For an IRA, the tax law which shields the distribution from taxation is the “transfer incident to divorce” law - so if there is no divorce - there is no shield against immediate taxation to the titled owner.

    d.    Some people believe it is ok to give a general idea of existing accounts/pensions and how they want retirement accounts split in a Settlement Agreement but lack of specificity is the number one reason for post matrimonial QDRO litigation.  

    e.    Never provide that accounts will be equalized as of the date of distribution.  Think about it - it is functionally impossible to do this because of the time involved in processing the paperwork in splitting an account.  Pick a date!

3.)    Pension options and benefits for government plans - All government plans require an actual divorce before an order dividing benefits is accepted.  With private plans, a QDRO is possible before the divorce is final.

    a.    New York State and Local Retirement System - By far the most common.  The NYSLRS is for state and most county and city employees, including law enforcement.  Most employees get statements each March or so which outlines the key points of the employee benefit values.  The most important things to remember about the NYSLRS are:

        i.    Shared Interest - you must divide the pension as a shared interest as there is no separate interest allowed.

        ii.    Pre-retirement death benefits.  Pre-retirement death benefits are available and will pay a lump sum at the employee’s death before commencing benefits.  The amount of the pre-retirement (also called “Ordinary”) death benefit will be listed on the March statement each year.

         ii.    Survivor benefits are a critical component.  

            *    Survivor benefits are paid in the form of a joint and survivor annuity and must be elected at the employee’s retirement.  The NYSLRS will calculate a ‘special joint life’ option which will pay the non-employee spouse a level benefit for his/her life.  

            *    If the employee does not elect a joint and survivor option, there is only a 30 day window after retirement to fix the problem.  If you miss the window, no court order can bring the option back or require the NYSLRS to provide the benefit.

            *    If a pop-up option is important to the employee, that should be discussed with the financial team and embodied in the Agreement.  A pop-up option will increase the employee’s pension if the non-employee spouse predeceases him or her to the amount it would have been as a single life annuity allowance.  There is a cost associated with this option which is separate from the cost of the survivor benefit.

            *    Survivor benefits usually cost roughly 9% of the benefit to be continued, so it is important to determine who will bear the cost of the benefit or if it will be split.  

            *    It is important not to short shrift survivor benefits with a term life insurance policy as policy will likely not be available when the employee spouse reaches elder years. 

            *    The employee can only take his or her benefit with 1 person.  Therefore, if a former spouse is named, a subsequent spouse can not be named.  This is an important factor to consider.

            *    If you have a police officer or firefighter - always discuss the possibility of disability.  This should be addressed because if disabled, the employee can not perform any other work at all - meaning that he or she is not able to get a second job to make ends meet if there is not enough money left to pay the bills.

        iii.    There is frequently but not always a post retirement death benefit also available, depending on the Tier.  For most employees, during the first year of retirement, the benefit is 50 percent of the ordinary death benefit shown on the most recent NYSLRS benefit statement; during the second year of retirement, the benefit is 25 percent. During your third year and thereafter, the benefit is 10 percent of the ordinary death benefit that would have been payable at age 60, if any, or at retirement, whichever was earlier.

    b.    New York State Teachers Retirement System - For teachers but not University faculty.  This is run very similar to the NYSLRS with one big exception for survivor benefits.  The employee is able to elect a lump sum survivor benefit for someone else, even if he or she is required to elect a joint and survivor benefit with a former spouse.  This will further reduce the monthly payment as there is a cost involved - but it may be a handy benefit to know about.

    c.    New York State Deferred Compensation Plan - This is a 403(b) Plan with a cash value.  It is important to note that the DCP will not calculate gains or losses with this type of account.  If the divorce is quick, list the division as either a sum certain at distribution (eg. $27,500) or as a specific percentage at distribution.  There are drawbacks to each option which we will discuss.  

    d.    TIAA/CREF - This is usually for University faculty.  Requires a QDRO.  Specific contract numbers to be split are REQUIRED - so it is imperative that we have accurate statement or - better yet - list the contract numbers right in the Agreement.

    e.    Military retirement

        i.    Active Duty - Payable early after 20 years and you can use a Majauskas formula division.  Former Spouse Survivor Benefit is available at retirement or - in some cases - if a military member is killed in action.  

        ii.    Reserves - Need print out of points to calculate the number of points earned during the marriage.  20 years is required for retirement and can ot collect before age 60.

    f.    Federal Employee’s Retirement System (FERS) and Civil Service Retirement System (CSRS).  This is for Federal Employees like post office, VA, etc.  Know whether the benefit is a FERS or CSRS or both.  

    g.    Federal Thrift Savings Plan  - Straight forward cash based benefit.  Order is also straight forward.

    h.    Railroad Retirement = Yuck!  Dovetails with the Social Security System and rules change frequently.  This is one where I would check the rules each time I see it.

4.)    Discussion with the client and document collection to assist with the QDRO process.

    a.    It is helpful to gather statements, where possible.  Some larger employers administer scores of retirement plans from previously acquired companies and finding the right one may be difficult.  A statement will provide not only financial information but also the correct name of the retirement plan.

    b.    It may be helpful to get a QDRO attorney involved before the Settlement Agreement is drafted/signed to discuss appropriate options for the clients and provide language for the Agreement.

    c.    Keeping this outline as a quick ‘cheat sheet’ will be helpful to discuss benefits with clients.


Practicing law full time in private practice for 20 years, Kelly V. Zarcone is a partner in the law firm of Brenon, Lipman & Zarcone, LLP in Williamsville, NY where she concentrates in the areas of Post Divorce Asset Division (QDROs) and New York/Florida tax, estate planning and probate.

She is admitted to practice in New York, Florida, Federal Court, United States Tax Court and the United States Supreme Court.  Professional memberships include the New York State Bar Association, Florida Bar Association, Bar Association of Erie County and the Financial Planning Counselors of Western New York, Inc.  

Active in her community, Zarcone has served on the board of the Buffalo Music Hall of Fame since 2008.  She served on the Board of the Women's Bar Association of the State of New York, as a local director (2007-8) and on the Women Lawyers of Western New York Board (2004-5). In 2004, she was elected to the Starpoint Central School District Board of Education and was reelected in 2007.  In addition to her full time law practice, Ms. Zarcone has also served as adjunct professor at D’Youville College and the University at Buffalo Law School. Zarcone lectures frequently topics relating to QDROs and various tax issues and coauthored the New York State Bar Association Course book entitled, “Income Taxation of Decedents, Their Estates and Their Trusts” and “Comprehensive Review of Trust Planning and Drafting Techniques.”  She also worked extensively with partner Allan R. Lipman to digitize and update his book, “How Smart Snowbirds Save New York Taxes” for the web at  

As an undergraduate, Zarcone studied at Oxford University (Hertford College), England, concentrating on tax as a barrier to trade. She continued her studies at Braunschwieg University in Germany, and the State University of New York at Buffalo.

Prior to University, Zarcone served active duty in the United States Army as a German linguist in Military Intelligence at the end of the ‘Cold War.’ In 1991 she received the Kuwait Liberation Medal for combat service in the first Persian Gulf War, Operation Desert Storm. She then went on to receive her Juris Doctorate, cum laude, from the State University of New York at Buffalo Law School in 1997 with concentrations in Taxation and Real Estate Development and Finance.

  Need a Qualified Domestic Relations Order in Williamsville or anywhere in the WNY Area? Call us!