How much does a QDRO cost in Texas?

Fort Worth QDRO LawyerQDROs are qualified domestic relations orders–a special court order used to divide retirement plans in a divorce or child support action. Often in a Texas divorce they divide 401k plans and pensions. Benefit laws and the Texas Family Code require QDROs to divide these plans. A major concern for people who divided retirement plans in their divorce is how much does it cost to get a QDRO. This is completely understandable. QDROs require coordinating between the parties in the divorce, the judge and the plan administrator. Any problems that arise can drag dividing the retirement plan to a screeching halt. Even worse, incorrect drafting can lead to incorrect division of the 401k or pension.

The cost of a QDRO can depend on several factors:

  1. The type of plan;
  2. The disagreement between the parties on the plan division;
  3. How the attorney bills for QDRO drafting

These factor may drive the cost of a QDRO up or down. However, in the vast majority of divorces a QDRO should cost no more than $500 for drafting. Let’s talk a little more about these factors.

How retirement plan types affect QDRO costs in Texas

The type of retirement plan can significantly affect the amount of time it takes to understand the plan benefit and draft language that accurately divides the plan benefits in accordance with the divorce decree.

Generally defined contribution plans like 401ks and 403bs are simpler plans that can be more easily divided. There is a specific dollar amount attached to a participant’s benefit. Today most of these plans perform daily accounting. That allows us to easily know what the plan was worth on the date of marriage and date of divorce. Dividing these plans are usually straightforward.

However, defined benefit pension plans are more confusing. Most pension plans state benefits as a monthly payment at retirement. Figuring out the present value and how to divide that under the terms of the divorce decree is far more confusing. Plans have various benefit formulas and may have changed formulas several times over the participant’s employment. The plan rules may tuck way hidden death benefits or alternate pre-retirement benefit options. Plan administrators do not always even understand their own plans.

Obviously an easier plan requires less work for the divorce attorney or QDRO lawyer and one should expect it should cost less to draft.

Do the parties agree to the terms of the QDRO?

If the parties disagree on the language in the divorce decree then that can increase the cost of drafting to discuss and revise. This increases the time and therefore increases the amount of work involved in drafting the QDRO. Of course, even after drafting the QDRO there may be a second battle in court over the judge signing a proposed QDRO.

How much do attorneys cost to draft QDROs?

You may have your divorce attorney draft your QDRO as part of working on your QDRO or you may hire a separate QDRO lawyer to draft the QDRO. Not all divorce attorneys in Texas draft QDROs. Many outsource QDRO drafting themselves to other attorneys with experience drafting these orders. If your divorce attorney drafts your QDRO then you are likely paying one of two ways for the QDRO. Also, if your divorce attorney drafts the order then you are likely paying his or her hourly rate. If your attorney outsources drafting to anther attorney then you are likely paying whatever the QDRO lawyer charges your client.

Most attorneys who draft QDROs charge a flat fee rather than hourly for this service, myself included. Typical flat fees in Texas are $500 or less. In my experience, the lawyers in Texas with expertise in QDRO drafting and retirement plans charge around this amount. I have seen attorneys charge as much as $2000 for a QDRO. These tend to be attorneys who spend a lot of time trying to understand the plan rules because they are unfamiliar with most plan formulas. Even after charging outrageous fees they make take an extremely long period of time to get the language correct. Experienced QDRO lawyers know how to efficiency obtain plan rules and identify the necessary rules to draft your QDRO. There’s very little reason why a typical QDRO should cost $2000.

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