What is a QDRO?

 A QDRO is a special type of court order that divides certain retirement plan benefits in a divorce. A QDRO is issued in addition to a final judgment granting your divorce. It contains specific directions to the retirement plan administrator regarding how the plan should be divided between the spouses. It’s essential that your QDROs are accurate and complete. If your QDROs fail to cover all of the community retirement assets, you may not be able to receive them later.
You don’t need a QDRO to divide Individual Retirement Accounts (IRAs), deferred annuities, or government retirement plans (military pensions and federal, state, county, or city retirement plans). You will need a QDRO if you’re trying to divide the following types of plans:
• 401(k), 403(b), and 457 plans
• thrift plans
• profit-sharing plans
• money purchase plans
• employee stock ownership plans
• tax-sheltered annuities, and
• business/corporate defined benefit or pension plans.
In the divorce context, the spouse that earns retirement benefits through his or her employment is called the “employee spouse” or “participant.” The other spouse is referred to as the “non-employee spouse” or “alternate payee.” Federal laws governing retirement plans prohibit certain types of plans (mentioned above) from paying benefits to anyone other than the participant, unless the plan has been directed to do so under a QDRO. In short, a QDRO allows the retirement plan administrator to pay benefits to the alternate payee.
On the surface, QDROs may seem easy to prepare, especially where the spouses are cooperating with one another. Many attorneys (and non-attorneys) try to use a “one-size-fits-all” approach to drafting QDROs, or use a plan’s model QDRO without a full appreciation of the legal and financial consequences of certain provisions.
However, the rules governing QDROs and retirement plans are complex and constantly changing. There are a variety of plans and each has unique requirements and features. A QDRO must be drafted to meet specific legal criteria and tailored to the particular type of plan it’s supposed to divide. Using a generalized approach to a QDRO can result in an improper division of benefits, the loss of important rights under a plan, and a total or partial loss of benefits upon the death of the participant.
To make sure your retirement plans are divided properly and accurately, call SuperLawyer Denise Placencio at 877-317-8080 for an appointment.