Qualified Domestic Relations Order (QDRO)
Contents
What is a QDRO?
A QDRO is a part of a judicial order passed for a division of property in a divorce or legal separation specifically retirement and pension plans such as 401(k), 403(b), and 457. It recognizes an alternate payee’s right (to receive, or assigns to an alternate payee) all or a portion of the benefits payable to a participant under a retirement plan. It allows a former spouse to receive his or her share of a retirement account of the other spouse that the other spouse earns through an employer-sponsored retirement plan. They are usually part of a divorce, but they are sometimes drafted years after the divorce.
Why QDRO is Needed?
QDRO is treated as a part of the marital property (community property) of the spouses and is subject to division in case of divorce, under the law. The benefits earned by a retirement or pension plan during the marriage, are divisible as a part of the property division in case of divorce or legal separation.
You don’t need to get a QDRO with the divorce order, however, it is advisable to file a QDRO along with the divorce case, to avoid complications and associated costs. If an appropriate court order is not in place during the divorce, an entitled spouse may lose his or her share in the retirement account. Without a specific formal order, a former spouse will not have any share in the spouse’s retirement benefits.
How to get a QDRO?
To get QDROs, an interested spouse or former spouse must have information about the plan with specific details. If the information is not available, the plan administrator may be requested to share the information, who may charge a reasonable amount for the same. Once the required information is available, the same may be submitted to the relevant court.
Approval of the other Spouse
Once the QDRO has been drafted, based on the information gathered, concerning the plan and other details, the applicant will have to get approval/signatures of the other spouse. If the QDRO is drafted pursuant to a divorce decree, it may go smoothly. However, if the QDRO is filed with the divorce case and the other party is being irrational, the QDRO may be directly filed in the court.
Approval of the Plan Administrator
After the spouse’s approval, the applicant will send a copy of the QDRO to the plan administrator for its approval. The administrator may request changes in certain cases, and the finalized QDRO will be filed in the court, after getting signatures of the parties.
Filing QDRO in Court and Order
Once the QDRO is filed in the judge will review it and after satisfying himself shall sign the QDRO the court clerk will file it and enter the court record.
Submitting Certified Copy of the QDRO with the Plan Administrator
Lastly, the applicant will share a certified copy of the QDRO with the Plan Administrator for its action for actual division, setup, and a separate account for the benefit of the applicant. Prior approval of the Administrator will help in swift action by the Administrator.
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