Facts: Husband and Wife divorced in 2010. Their judgment of divorce says:

The Husband’s 401(k) retirement through ING with an approximate balance in the amount of $96,200 shall be divided so that Wife shall receive 30% as of the date of the divorce[,] and the Husband shall receive the remaining 70%.

Wife’s counsel did not submit a proposed qualified domestic relations order (QDRO) to the trial court until 2018, eight years after parties were divorced.

The proposed QDRO directed the plan administrator to assign Wife “an amount equal to 30% of Husband’s total vested account balance as of” the date of divorce in 2010. It also provided that Wife’s “benefit will be adjusted for investment earnings and losses subsequent from the [date of divorce] to the date a separate account is established for Wife.”

The trial court entered the QDRO. Husband moved to alter or amend the QDRO, arguing it contradicted the terms of the final judgment of divorce. The trial court denied Husband’s motion.

Husband appealed.

On Appeal: The Court of Appeals affirmed the trial court.

A QDRO allows an alternate payee to receive all or a portion of the benefits payable to a participant under a private pension plan or pretax retirement account like a 401(k).

Husband argued that Wife’s benefit should not be increased to reflect investment earnings after the divorce. Under Husband’s reading, Wife should receive $28,860—30% of the value of his 401(k) on the date of divorce—instead of $85,419.47, which amount reflects 30% of the investment gains during the eight years after the parties’ divorce.

Citing in Indiana case, the Court interpreted the final judgment to implicitly include investment gains and losses:

We conclude that the language in the QDRO adjusting [Wife’s] share of the [401(k)] account for investment earnings and losses subsequent to the valuation date is consistent with the final decree. It is implicit in the division of the retirement account that the parties will bear potential earnings or losses in the account until the division can be carried out through a QDRO. Had it intended to award [Wife] a fixed sum from the account, the court could have done so.

The Court affirmed the trial court’s ruling.

K.O.’s Comment: (1) The delay some lawyers experience in drafting and submitting QDROs to trial courts is a chronic problem. It’s hard to imagine any justification for an eight-year delay in doing so. In Stiel v. Stiel, the Court of Appeals urged Tennessee attorneys to “draft the QDRO contemporaneously with, and to read symmetrically with, the pertinent language in the Final Decree of Divorce so that issues such as these do not arise.” That remains the best practice today.

(2) The Court designates this as a “memorandum opinion,” meaning the case cannot be “cited or relied on for any reason in any unrelated case” per Court of Appeals Rule 10. Typically, that means the opinion is not worth covering on this blog. I made an exception for this case because I feel the Court’s finding of an implicit intent to include investment gains and losses even though the final judgment says Wife is entitled to 30% “as of the date of the divorce” is something Tennessee family-law attorneys need to know. That’s also a good reason this opinion should not have been designated a “memorandum opinion.”

Mpoyi v. Mpoyi (Tennessee Court of Appeals, Middle Section, February 27, 2020).