History of QDRO Group
The roots of QDRO Group go back over three decades. As the numbers demonstrate we have been at the forefront of leadership and innovation in the field since 1985. In that time, we have advised tens of thousands of attorneys, produced over 60,000 actuarial present value reports, prepared more than 80,000 orders, testified as experts in over 1,700 cases, and been mentioned in hundreds of courts of appeals cases.
QDRO Group got its start in 1985 when Dave Kelley started calculating actuarial present values for defined benefit pensions under the name of Pension Evaluators. At the time, actuarial lump sum values for pensions were in their infancy in Ohio. In fact, the “fundamental treatise” in the field had only come 10 years before from Murray Projector in California.
It was also the year that Qualified Domestic Relations Orders (QDROs) were created by the Retirement Equity Act.
The business grew slowly but steadily for the next four years. Kelley often refers to the 1985 – 1989 years as the “dark years”, because the Ohio Supreme Court had not yet taken an exact stance on the marital nature of pensions. Many courts were uneducated on what the value of a defined benefit pension was, and how an actuarial present value reflected a “real” value, i.e. the cost of a replacement vehicle in the annuity market. Few courts still viewed pensions as a mere contingency with no real value, but a significant slice valued state pensions as the refundable employee contributions. Of course, few plan participants were willing to forego their state pension for those refundable contributions.
Then came a burst of growth for the company, as the Ohio Supreme Court ruled that pensions in pay status were marital property in Holcomb v. Holcomb, 44 Ohio St. 3d 128 (1989), and that deferred pensions should be distributed with the “proportionate share” (coverture) method in Hoyt v. Hoyt, 53 Ohio St. 3d 177(1990). Kelley was joined by an attorney, Marie Mirro Edmonds, and the company began to draft QDROs for attorneys and began to testify extensively around the state – sometimes up to three times in a day.
Most of all, a new breed of attorney, like Kathryn Belfance in Akron, appeared who refused to accept pensions as “mere contingencies”, or the “cash out” value as being equitable. These attorneys studied the new property division sections of the Ohio Revised Code and the recent supreme court rulings. With the help of Pension Evaluators, Ohio case law began to change, sometimes quickly.
Then we were involved in the first Social Security offset case when attorney Randall Lowry of Cuyahoga Falls successfully argued in 1992 in Stovall v. Stovall, C.A. Ninth Dist. #15335 (Sept. 23, 1992), that it was inequitable to throw the entire pension of a state plan participant into the marital property pot while ignoring the Social Security of the other party. Thus, Social Security offsets came into being in Ohio, when government pension plans that were not integrated with Social Security were being divided. Cost of living adjustments were also litigated and gradually came to be accepted as an element of present values.
Another example of our influence on case law was when the very nature of present values was litigated by Akron attorney Terrence Ufholz in Conant v. Conant, C.A. Ninth Dist. #16401 (April 13, 1994). Conant established the fair market value of pensions as the cost of a replacement annuity when it decided:
“Mr. Kelley correctly calculated Wife’s annual pension benefit, starting at age sixty, according to R.C. 3307.38. He then convincingly demonstrated the present cost of an annuity that would pay her the same benefit. That cost is the present value of the pension and the trial court properly used that amount in its division of marital property.”
And Pension Evaluators was changing.
In 1996, Kelley merged his company with ERISA attorney Gary Shulman’s to form Kelley Shulman & Co., LLC, which also did business under the name QDRO Consultants, as well as Pension Evaluators. Later, the companies became simply known as QDRO Consultants Co., LLC. The company now had two divisions: the lawyer services side, which did actuarial present values and drafted QDROs; and the corporate administration division, which administered QDROs for companies.
Attorneys who wished to bring greater equity to domestic relations continued to find partners in Medina. For example, after years of fighting for QDROs on state pension plans came Erb v. Erb, 91 Ohio St. 3d 503 (2001). ERISA attorney John McGowan and DR attorney James Loeb, successfully forced the state plans to accept QDRO-like orders directly dividing state pension plans. The court was blunt in forcing the state pensions to recognize the special nature of former spouses:
“The purpose of R.C. 742.47 is to protect fund benefits from the creditors of persons to whom benefits are due. However, a member’s former spouse who has been awarded a property interest in the member’s pension pursuant to an R.C. 3105.171 division of marital property is not a creditor of the member with regard to the pension. Rather, by virtue of the court order, the member’s former spouse has an outright property interest in the pension itself. For the reasons set forth above, we hold that R.C. 742.47 does not prohibit the fund from paying benefits directly to Donna.”
The corporate administration side of the business then embarked on significant growth, as a number of major record keepers turned to our company for our expertise and superior servicing model. However, the growth of the corporate administration side posed a significant problem to lawyer services. Plans perceived a conflict of interest for one division of the company to draft orders which another division then administered. It was clear that, as the corporate administration side of the business grew, lawyer services would suffer. As the company added nearly 2,000 corporate administration clients, the QDRO-drafting side was conflicted out of more and more orders.
In June of 2016 Dave Kelley bought out his partner, Gary Shulman, and a number of significant changes were immediately made.
In August of 2016 the lawyer services division physically moved to a new location as it prepared to become an independent legal entity, QDRO Group, by late 2017. In addition, the entire lawyer services division of the company was revamped and restructured with the staff being nearly doubled and another ERISA attorney being added to the team.
The company then defined its mission and values on a “built to grow” attitude. The company mission was straightforward: “We partner with domestic relations attorneys to wisely divide retirement assets, and to secure a family’s best possible future following a divorce.” Attorneys were encouraged to recognize the deep legal and actuarial expertise, and experience of QDRO Group; to see how our specialists could guide them through the complex world of retirement asset division. In fact, over the years, the staff wrote eight leading legal texts, including Dividing Pensions in Divorce: Negotiating and Drafting Safe Settlements with QDROs and Present Values, 3rd Edition, and Value of Pensions in Divorce, 5th edition.
Most of all, we wanted attorneys to know that hiring QDRO Group is the best insurance policy they can buy. They know that, if they run into complex issues, our legal team is ready to step in and help solve the most difficult issues because we provide practical, battle-tested expertise on the issues that matter most to their clients. Vexing issues like survivorship in QDROs, military benefit division, Taft Hartley plan funding issues, Social Security offsets to government pensions, the marital portion of disability retirements and the avoidance of the double dipping of pensions.
The management team has been working on ambitious rebranding, infrastructure, and marketing plans for the future, recognizing that the world of retirement asset valuation and division belongs to specialists trained and experienced in the field. QDRO Group is being built on this team-concept foundation, where everyone has broad general legal, actuarial, and accounting knowledge, and an especially deep and profound understanding of her or his area of concentration.