This article will discuss Qualified Domestic Relations Orders (“QDRO”), what they are, when they are needed, and what the process is for having the order approved and the process completed.
What is a QDRO?
QDRO’s are governed by federal law. A QDRO, as defined by Internal Revenue Code Sec. 414(p)(1)(A), is a court order in a divorce case that divides ownership of an employee-sponsored retirement asset. Typically a QDRO is prepared after a settlement or trial along with the Decree of Divorce and other related court orders and transfer documents. It essentially orders the plan administrator to divide the asset between the parties and gives instructions on the specific details of the division of the asset.
When a QDRO is Needed
Most assets divided in a divorce case will not require a QDRO. For example, real estate, vehicles, non-retirement financial accounts, and even IRAs (usually) can be divided and transferred between the parties without the need for a QDRO. That is good because QDROs add some additional work and expense. The only assets that absolutely require a QDRO are employee-sponsored retirement assets, typically pensions and 401k accounts. Division and transfer of these assets is simply not possible without a properly prepared QDRO that is approved by the plan administrator.
What Information Must a QDRO Contain?
According to Internal Revenue Code Sec. 414(p)(2)(A)-(D), in order to qualify as a QDRO the order must contain:
- The name and address of each party
- The specific name of the plan
- The dollar amount or percentage of that is to be paid to the alternate payee (sometimes this is done with a formula)
- The number of payments or time period to which the order applies
What Provisions Can NOT be in a QDRO?
Internal Revenue Code Sec. 414(p) also explains that a QDRO can never require the plan to:
- provide any type or form of benefit not otherwise provided under the plan
- provide for increased benefits
- pay to an alternate payee benefits that are already required to be paid to another alternate payee under a previously approved QDRO
- pay benefits to an alternate payee in the form of a qualified joint and survivor annuity for the lives of the alternate payee and his or her subsequent spouse
Brief Summary of the QDRO Process
Often the attorney for the party receiving a share of the other spouse’s retirement will draft the QDRO. Sometimes that attorney (or the client) will hire a QDRO attorney specialist to prepare the QDRO. The draft is reviewed and signed by both attorneys and often both parties as well prior to submission to the court. Often the QDRO is submitted and signed the same time as the Final Decree, although it is not uncommon for delays to occur with the preparation of the QDRO and for it to be submitted sometime shortly after the Decree. For example, some attorneys prefer to first provide a draft to the plan administrator to obtain pre-approval prior to submission to the court.
Once the court has signed the QDRO a certified copy of the order is obtained and submitted to the plan administrator. If approved the appropriate division is made. If for some reason the QDRO was not approved the plan administrator is required to explain the reason for rejection. Then the party can submit an amended QDRO to the court and start the process all over again.
About the Author
Scott Morgan has practiced family law in Texas since 1994, and is a guest writer for this blog. Scott is board certified in family law by the Texas Board of Legal Specialization and is the founder of the Morgan Law Firm which has offices in Houston, Austin and Sugar Land. Currently Scott handles primarily Travis County divorce cases from the Austin office.
L says
How long does a person have to collect QDRO once it is approved? Has that always been the case?
LA says
How long does a person have to collect QDRO once it is approved? Has that always been the case?
H says
July 22nd, 1990 was the date of my Divorce Judgment Entry. I am retiring in June of 2019 and no QDRO was ever filed with the Court or presented to me. Is there a statute of Limitations on a QDRO being served?
E says
Hello, I need a QDRO finished, it was started in around 2004 and never got completely finished. Would you be able to complete this, and if so, what would be the charge?
R says
State of Ohio, Clermont County. My divorce was finalized in 1997, and QDRO was supposed to be issued against my Pension. At the time I was not contributing to the 401K. The QDRO was never filed with courts, or with my employer or with both parties. It stated “Wife is entitled to 1/2 of my pension up to Nov 1997. I started with CBT in Jan 1996. Now I just found out my ex passed away on 2/5/18. Do I need to do anything or do nothing since she’s deceased?
D says
was married for 12 years. Wife and I got a divorce. I had 5year old 401 plan in which she received 50% of funds in the account. she had 401 plan 30 years old, with much more funds than mine. Funds from my account where transferred to an account for her from day we were divorced. It has been 2 years and I have not received anything from her account. her attorney hired the QDRO company. I have talked to the plan administrator Fidelity Investments and was informed. What was sent did not qualify. Fidelity sent me to there web site and walk me though their site on how the QDRO should be prepared. Fidelity site said I’am entitled to 50% of total value. Why the original QDRO company is saying I’am only entitled to 12.95% of the total value. How is corrected? We live Akron, Ohio. Thank you for your help.
S says
My divorce decree dates back to Oct of 2012. I had undergone a lot of negligence by my attorneys throughout the divorce process and thereafter. I was told I would need a QDRO for each pension from my ex husband, which is a total of 4 and that the costs were an upwards of a couple thousand because each one has a fee. I knew nothing about this while the divorce process was happening and was told this after the fact. The only thing I was made aware of is that I am to receive half of these assets for all 4 and that is all. Do I have to have these QDROs drawn up still because the decree is vague and mentions nothing of this.
TA says
I was married for 27 yrs and have a QDRO. Is the amount to be issued to my ex-spouse figured on the total money I have earned in the 36 yrs of employment ? Or is it calculated on my wages earned for the first 27 years of employment that we were married?
M says
I was divorced in 2011,a QDRO had to be filed on my retirement ,I paid my half of the fee but she refused to pay her half so the lawyer refunded my half,and did not file the QDRO it has been 5yrs. now I am ready to retire.I have no way to contact her,dont know her address or ph.#. can I still collect my part of my retirement?
DH says
I have a question how do you stop a QDRO when the amount that was requested is paid?
How can a person get an attorney in Ohio to sit down and answer question about QDRO in person ?
Also is it legal to order and judgement on a QDRO in if the defendant isn’t present in court of knows nothing about this until the judgement has been made?
Thank you
V says
Need to ask a question