If you are divorcing your spouse, and want your share of the retirement benefits they accrued during your marriage, know that your divorce judgment is insufficient to access those funds. What you need is a qualified domestic relations order or QDRO.

Most people who haven’t split retirement funds because of divorce have never heard of a QDRO. It’s easy to assume all you need to do is note in the judgment for the property settlement that you will receive a percentage of your spouse’s pension or retirement benefits. But that will leave you coming up short.

Only a QDRO addresses this matter. In this article we’ll explain the meaning of QDRO is, how it functions in a divorce, and how a divorce attorney can help you secure a proper QDRO for financial protection.

What Is a QDRO? QDRO Meaning

A Qualified Domestic Relations Order is a court-ordered legal document that is typically part of a divorce agreement. It establishes that a spouse, former spouse, child, or other dependent is entitled to a portion of a retirement plan owned by their ex-spouse, parent, or guardian.

The Details of QDROs

Qualified domestic relations orders ensure that those affected by divorce will receive a fair share of money saved during the marriage, as it’s assumed both parties contributed to financial and home stability, even if they weren’t earning the money directly.

Unlike other aspects of the divorce agreement, the QDRO addresses money that may not be liquid for years or decades to come.

Considering how much can change in that stretch of time, including new marriages, children, assets, and debts, having this plan in place right away will likely save stress and conflict down the road, when you and your former spouse may no longer have anything to do with one other.

Be aware that a QDRO only covers certain kinds of accounts, including:

  • Private pension
  • 401(k)
  • 403(b)
  • 457
  • Employee stock ownership
  • Defined benefit plan

It will not address a private IRA plan.

Your QDRO needs to contain the following details:

  • Names and addresses of account owner and each payee
  • Which specific plans the order applies to
  • Percentage or dollar amount that will be paid to payees
  • Payment plans (timelines)

Other ways a qualified domestic relations order might work includes scenarios like the following: Suppose your ex-spouse is court-ordered to pay spousal or child support but either cannot due to hardship or simply dodges paying. You can get a QDRO to divert these funds from the retirement accounts.

Be aware of all tax implications from your actions, however – if you are the recipient spouse, it could markedly increase your tax burden.

How a QDRO Works

With a qualified domestic relations order, the earning spouse (or participant) will, by default, be entitled to all their benefits unless the non-working spouse is designated as an alternate payee in the order.

Each retirement plan is a little bit different in what they require the QDRO to state, so your attorney will communicate with the plan’s administrator to determine the language and form of the order.

Once the legalities are settled, you can opt to have the money moved into an existing retirement plan, put into a Roth IRA, or distributed as cash.

Understand that, if you choose the Roth or cash options, you’ll need to pay taxes on the money upfront. If the payee is a dependent, the plan participant (account owner) will pay those taxes.

Until the QDRO has been filed by the court, signed by a judge and received by the pension plan administrator, the funds are inaccessible to the non-worker spouse.

QDRO Requirements and Qualifications

First, establish whether or not you are entitled to a share of your spouse’s pension or retirement accounts.

From there, you need to know the specifics about these accounts. For example, you will need a QDRO if you are trying to divide a 401(k), 403(b), or pension plan. You will also need this order for any other type of employer-sponsored retirement plan, including civil service plans or IRAs (federal and state).

Individuals with income exclusions can apply for QDROs as well. The most notable examples are government and military pensions. Most pension plans, IRAs 401(k) and 403(b) have to be specifically detailed in this order in order for you to get your share of the retirement funds.

Generally, you should discuss and begin the QDRO process early in the divorce process.
Not only is it a piece that is too often forgotten, but the sooner you start, the less likely your spouse will move the money and make it impossible for you to access.

Once the document is created, the retirement plan’s administrator will file it with the court.

FAQs About Qualified Domestic Relations Orders

QDROs are complex. Even when you work with a top-notch family attorney, you might have some questions in mind.

Do I Need a QDRO to Divide Our 401(k) or Other Retirement Account?

No. It’s possible for divorced couples to determine this division themselves. However, this requires a massive amount of trust, which isn’t always possible when the marriage ends. Further, a casual arrangement (with no legal documentation) can’t possibly foresee every potential challenge in the form of a new spouse, children, deaths, financial circumstances, and relocations.

Can My Ex-Spouse Claim My Pension or 401(k) Years After Divorce?

Yes, although a claim isn’t a guarantee that they’ll get it. Depending on the specifics of your marriage and divorce, they could get a significant portion or nothing at all. Having a qualified domestic relations order in place protects both of you for the rest of your lives, even if that’s decades.

How Long Does It Take to Get QDRO Money?

As with most court-ordered payments, it depends. The simpler your case, the faster the process and payment. Complications, however, might add years to your wait. Timelines also depend on whether you choose a lump sum or scheduled payments.

Learn More About Divorce Entitlements from Envision Family Law

A family law attorney can tell you all you need to know about QDROs. These documents, and the process of creating them, is complicated; it’s always in your best interest to work with an experienced divorce attorney.

When you’re ready to get started, call or text (888) 211-7814 or complete the easy contact form on our website. We conduct virtual consultations for your convenience as well. It would be our honor to work with you.