A married couple's wealth is typically measured by their home, automobile, and pension assets. Since homes and automobiles are generally encumbered, a couple's pension is often the single most important marital asset. As the divorce rate continues to rise, so does the concern about the equitable division of marital property. As a result, family law practitioners frequently place a high priority on pension issues when dividing the marital assets.

The Employee Retirement Income Security Act of 1974 (ERISA) was enacted to protect the interests of participants in employer-sponsored pension plans. ERISA and the Internal Revenue Code (Code) impose numerous requirements on most pension plans. One such requirement is that a participant's benefits cannot be assigned or alienated to another person. This antialienation provision and ERISA's broad preemption provisions often conflicted with state laws designed to ensure that individuals satisfy their family support obligations.

In response to this conflict, the Retirement Equity Act of 1984 (REA) established the qualified domestic relations order (QDRO) exception to the antialienation provisions of ERISA and the Code. The QDRO exception was intended to provide a higher level of equity regarding pensions for participants, their spouses and dependents. REA recognized the status of marriage as an economic partnership whereby the spouse who worked within and/or outside the home was considered to have made substantial contributions to that partnership.

When pensions are part of the marital assets, complex federal laws directly impact upon state court proceedings. Moreover, in addition to substantive state law issues, a QDRO must be prepared to satisfy certain federal requirements as a prerequisite to dividing pension benefits. In addition to being familiar with the federal laws that govern pensions, the family law practitioner must also possess a thorough understanding of both the plan document and the plan's QDRO procedures. For example, family law practitioners often utilize model QDRO language provided by the plan administrator which may expedite the QDRO review process, and yet such boilerplate language may not equitably secure the alternate payee's rights.

Governmental plans covering employees of federal, state and local governmental entities are exempt from ERISA.  Because governmental plans are not subject to ERISA, each governmental entity can establish laws and regulations that govern its pension plan.  Additionally, each such plan has procedures that must be followed when pension benefits are assigned pursuant to a divorce.

Since the enactment of the QDRO rules more than twentty years ago, there has been a remarkable increase in the volume and complexity of QDROs. Due to the substantial dollar amount often involved, the numerous types of plans covering employees, the ambiguities in the QDRO statute and the absence of regulatory guidance, it is not surprising that federal and state QDRO litigation have increased dramatically.