Recently, I had an opportunity to review the services of a competitor in the QDRO drafting market. I won’t mention the name, but if you look for, “QDRO drafting services” on the internet, I assure you “Company X” pops up towards the top for all search engines.
I am a firm believer in competition. Competition strengthens the market for any product and pushes each supplier to provide the best service and product for the client. I also have a lot of professional respect for some of our local competitors who provide high quality service at reasonable prices.
For all the reasons above, I was absolutely floored by the product that Company X provides for a hefty payment of $350 per QDRO.
What’s wrong with using Company X?
1. Company X requires the client to do the legwork on retirement plan research!
While this might sound like a simple task to the uninitiated, it’s not. In fact, the most complicated part of our job as QDRO drafters is obtaining accurate information on all the plans being divided. We’ve amassed a wealth of plan information in our databases gleaned over 15 years of working with individual companies and plan administrators and our staff is highly trained in quickly locating any missing pieces. At least 50% of the cases we draft come to our office with plan information missing.
Why does it matter if the plan name, plan administrator and mailing address are wrong? Errors mean more delays and costs for the client. In our experience, incorrect information often leads to immediate rejection by the plan administrator. In turn, parties need to redo the Orders and resubmit to attorneys and the Court.
Even worse, many times clients inadvertently fill out our intake forms incorrectly. They’re not sure which plans are being divided. Without a person reviewing their file and interpreting the Judgment language, most of our clients wouldn’t get the money they’re entitled to receive. Although Company X asks for the Judgment of Divorce, in the case we entered, they didn’t let us know that we completed the form for the wrong account. They simply told us they couldn’t confirm the account name.
2. State laws vary widely on specific QDRO regulations for pension division.
Company X states that it does try to cross-check any issues with your state. On our sample case, there was a glaring error that conflicted with state laws in Michigan. Company X told us it couldn’t confirm any laws that conflicted in our state. The negative outcome for a client? More delays, more court costs and perhaps more litigation without an expert on hand to testify as to why the submitted QDRO does comply with state law.
3. Company X requires the client to interpret the terms of their Judgment.
There are subtle nuances in the language used to divide pensions and 401ks that can have a tremendously large monetary impact on both parties. As we always tell our clients, QDROs are not neutral; they always benefit one party at the expense of the other. A QDRO can be approved by the Plan Administrator and still be in conflict with the terms of a Judgment of Divorce.
4. Company X doesn’t read the Judgment language and prepare a QDRO; they expect the client to interpret the language and complete their forms with the particulars.
What if the client makes a mistake in interpretation? If they’re lucky and they still have an attorney, hopefully the attorney will catch it. If not, it could cost them thousands of dollars down the line in lost income and net worth in retirement.
The upshot: For an additional $100-$150, most reputable QDRO preparers will do all the legwork, applying their years of knowledge in language interpretation and state law specifics to your QDRO. Not only is the extra fee worth the value, it also could save clients additional losses in unnecessary attorney fees to untangle a mess and untold losses in future income and net worth when the plans distribute the money.
In my humble opinion, Company X’s product isn’t worth a fraction of its fee and could end up hurting clients more than helping them.