What Is a QDRO?

qdro retirement

During a divorce, the court will decide how you and your spouse should split your assets, including vehicles, real estate, and money held in checking and savings accounts. You’ll also need to tell the court about any retirement plans you and your spouse hold separately or together. Still, you’ll need a separate order, known as a qualified domestic relations order or QDRO, to determine how to divide assets in specific, qualified retirement plans.

What Does QDRO Stand For?

What is a QDRO? What does a QDRO mean in divorce? If you’re currently going through a divorce or interested in starting the process, you may have heard the term QDRO. This acronym is one you should familiarize yourself with going forward, as it can become an essential element in a divorce.

A QDRO stands for qualified domestic relations order. This is a legal order that governs the split of a qualified retirement plan when a couple gets divorced. We’ve designed this guide’s information to answer some of the most common questions about a QDRO, like:

  • How does a QDRO work?
  • What is the purpose of the QDRO?
  • Who files the QDRO in a divorce?
  • Is a QDRO required in a divorce?

How a QDRO Works

The spouse who holds a retirement plan is usually called the participant, while the spouse to whom the court grants a portion of the retirement plan is generally known as the alternate payee. The court typically grants the QDRO as part of the divorce process rather than after, although one spouse may file for a QDRO after the divorce.

Neither party must sign or agree to the QDRO. Instead, a divorce judge will decide how to divide the retirement plan and what it will go toward, such as alimony or child support. If the alternate payee dies, the QDRO can ensure that the retirement plan continues to pay survivor benefits.

Date Segregation in QDRO

The valuation date of a QDRO is the set date when the funds are supposed to be divided, and date segregation is typically set by the plan administrator. The QDRO should always specify the awarded dates, QDRO amount, and alternate payee award.

What Is Included in a QDRO?

A QDRO can vary by state and with each retirement plan. Ultimately, your retirement plan dictates what must be included in the QDRO. Most retirement plans have specific requirements for the information that your QDRO must consist of to be accepted by the company.

In most cases, you can expect the QDRO to include both the participant’s and alternate payee’s full names and mailing addresses and the amount that the participant’s plan must pay to the alternate payee.

A QDRO may also include the name of the plan, the participant’s plan number, and the parties’ social security numbers. Sometimes included is detailed information about the benefit, such as the reason for it and its payment duration.

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Why Do I Need a QDRO?

You might be wondering, “What is a QDRO good for, and why do I need one?” Not all divorces will require a QDRO. However, divorces in which either spouse participates in a qualified retirement plan, like a 401(k), will rely on the QDRO to determine how to split the policy’s assets.

The reason for the QDRO is to protect the interests of both parties. By law, a retirement plan participant cannot give his or her assets from the qualified plan to someone else. Therefore, the plan will only pay benefits to the alternate payee when there is a QDRO in place.

Getting a QDRO

How long does it take to get your QDRO depends on how well you and your lawyer underwent the steps of the QDRO process.  However, don’t feel dispirited if your QDRO is taking months to get processed: QDROs are one of the fastest procedures of law, lasting up to a maximum of 2 years and a minimum of 2 months.

The QDRO process usually begins during the divorce proceedings and after both parties detail their assets to the court. If you’re unfamiliar with how a QDRO works its way through the court, the following steps can help you get started:

Find an Attorney

Although it is not illegal to file a QDRO without an attorney you might feel more comfortable hiring a family law attorney who is well-versed in divorce proceedings and handling the QDRO process. An attorney can work with you every step of the way to not only answer your questions and explain your options with your QDRO, but to also do the same throughout your divorce.

Family law attorneys have experience with divorces, child custody arrangements, and financial situations that may arise from your divorce. Their expertise can be invaluable when you’re faced with the need for a QDRO to help protect your financial interests in your divorce.

Notify the Court

The court will ultimately issue the QDRO, but you and your spouse can work together to draft the QDRO if you agree on its goals and details. However, it’s advisable to use an attorney to prepare this document to ensure that you include all required information and meet the plan and state regulations.

An attorney also understands the process for submitting the QDRO to both the retirement plan and the court, which could save you time and stress in your divorce.

Contact the Plan

The next step in the QDRO process is to contact the qualified retirement plan that’s subject to the QDRO. Your attorney can handle this step, too. After the retirement plan reviews the QDRO, a representative will let you or your attorney know whether it approves the document.

You or your attorney can make changes to the QDRO if the retirement plan denied the request. Most policies provide detailed information about what you may need to change or add to the QDRO to get it approved.

What Do I Do Once I Have a QDRO?

Once the retirement plan approves the QDRO, you and your former spouse will need to sign the document and submit it to the court. It will then become part of your divorce proceedings with legal information by which both parties must abide. The retirement plan may also require you to send its company a certified copy before any of the parties can receive funds.

We hope this guide answered the question, “What is a QDRO?” to help you draft the document and send it through the court system. It’s beneficial to understand what divorces require a QDRO, why, and how the document can protect the financial interests of both spouses.

An attorney that practices family law can be a guiding light through the process to help you navigate your divorce and its impact on assets as efficiently as possible.

Can a QDRO Be Denied?

A QDRO may be denied based on misinformation as determined by the plan administrator. All information in the QDRO must be accurate to minimize a possible rejection, and it’s important to make sure that everything in the account payout is correct.

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Jarrod Hays is the founder of Skyview Law. He is licensed to practice law in Washington State and the Western District of Washington State Federal Court.

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