Pensions, 401(k)s and other qualified retirement plans are often the most significant marital asset in divorce cases. A qualified domestic relations order, or QDRO for short, is a legal order, entered as part of a divorce or legal separation, that splits and changes ownership of a retirement plan to give the divorced spouse their share of the asset or pension plan.
QDROs may grant ownership in the “participant’s” (employee’s) pension plan to an “alternate payee”. The alternate payee is usually the divorcing spouse, but it could also be a child or other dependent of the participant.
A QDRO may provide for marital or community property division between the participant and the alternate payee, or for the payment of alimony or child support to the alternate payee. QDROs apply only to employee benefit or pension plans subject to ERISA, the Employee Retirement Income Security Act, the American law governing private sector pensions. Comparable types of orders are available to divide military retirement pay and Federal civil service retirement plans, and for State, county and municipal retirement plans in most States.
QDROs must first be entered by the State domestic relations court and then reviewed by the plan administrator for compliance with ERISA or other applicable law and the terms of the plan. The QDRO may be a separate document or it may be part of the divorce decree as long as it meets the standards for a qualified domestic relations order.
It is vital that the QDRO be properly drafted to protect the respective rights of the parties. As part of our document preparation services, Conscious Divorce offers experienced QDRO preparation for a reasonable flat-fee of $1,080 (for most cases).