Why must some retirement plans be divided in a special manner?
Federal law governs most retirement plans. Most retirement plans receive special tax treatment, allowing contributions to the plan to go in before taxes are paid, and further allowing the income on the money in the plan to accumulate without current tax. Upon divorce, a special order, called a “Qualified Domestic Relations Order” (QDRO) must be issued by the court and served upon the plan’s trustee. The QDRO defines how much of each payment is to go to each spouse.
