What is a QDRO?
Do I really need one? What can go wrong if I don t get one? QDRO means Qualified Domestic Relations Order, which is what you call the order made by the court to a pension plan (see above) telling it to follow the terms of your divorce Judgment. It is very important to have a QDRO whenever you divide a community interest in any pension plan, 401k or annuity. If you don t get a QDRO, there s no way to be sure the plan will follow the terms of your Judgment. Two different plans require two joinders and two QDROs. One plan with multiple parts may require more than one QDRO. Is a QDRO something I can do myself? No. A QDRO is very technical and not easy to draw up. It also has to be negotiated with and approved by the plan administrators. If a retirement fund is divided incorrectly, the parties could get hit with a big (unnecessary) tax bill. Plans are generally not interested in helping the non-employee spouse and can be difficult for any lay person to deal with.
A Qualified Domestic Relations Order (QDRO) is a legal document that tells the retirement plan administrator how to divide the retirement benefits that were acquired during the marriage between the parties. It is an order of the court, and is served upon and is binding upon the administrator of the retirement plan.
A QDRO is a Qualified Domestic Relations Order. Such an Order is signed by the Court and is necessary in order to distribute and divide certain pension and retirement benefits obtained by one spouse from the other pursuant to a divorce action. Thus, in order for such pension rights to ultimately be distributed from one spouse to the other, a Qualified Domestic Relations Order or a QDRO may be necessary. A Qualified Domestic Relations Order was established by the Retirement Equity Act of 1994 and is a means to accomplish the distribution of certain pension plans. Practically speaking, a QDRO is necessary whenever the plan to be distributed is qualified. A plan is deemed qualified if it meets certain requirements established in the United States Internal Revenue Code. Once a plan is considered to be qualified, both the plan as well as the participants under the plan are afforded preferential tax treatment. Government retirement plans on the other hand, are not subject to the rules of a Q
A QDRO ( Qualified Domestic Relations Order) is a court order that is used to divide retirement plan assets between a divorcing couple. (A QDRO can also be used to collect child support or alimony from a plan participant’s retirement assets). It is signed by the Family Court Judge with jurisdiction over the divorce case, and filed with the Court. Next, the signed QDRO is sent to the Plan Administrator for approval. Once approved by the plan administrator, the assets are divided per the terms of the QDRO and a separate account is established for the non-participant spouse ( aka “alternate payee”).
