A QDRO is often a part of divorce but many family
law attorneys understand they should refer clients
to someone experienced in preparation of QDRO's. Hire a professional when you really need one.
1. What is a QDRO or Qualified Domestic Relations Order?
A "qualified domestic relation order" is a domestic relations order that creates or recognizes the existence of an alternate payee's right to receive, or assigns to an alternate payee the right to receive, all or a portion of the benefits payable with respect to a participant under a retirement plan and is usually part of a marital or community property division.
2. What is a “domestic relations order?
A domestic relations order is a judgment, decree, or order that is made pursuant to state domestic relations law. A state authority, generally a court, must issue a judgment, order, or decree or otherwise formally approve a property settlement agreement before it can be a domestic relations order. If the order survives ERISA then it becomes Qualified and thus a QDRO.
3. Why should I retain an expert to prepare a QDRO?
A QDRO should reflect the intention of the parties. The participants should consult with someone who has knowledge in this complex area and can work on their behalf to protect their interests and divide the benefit as ordered.
4. Who can be an “alternate payee"?
An order can be a QDRO only if it creates or recognizes the existence of an alternate payee's right to receive, or assigns to an alternate payee the right to receive, all or a part of a participant's benefits. For purposes of the QDRO provisions, an alternate payee cannot be anyone other than a spouse, former spouse, child, or other dependent of a participant.
5. What must be included in a domestic relations order contain
to qualify as a QDRO?
The name and last known mailing address of the participant and each alternate payee. The name of each plan to which the order applies. The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee. The number of payments or time period to which the order applies.
6. May a QDRO provide for payment to the guardian of an alternate
If an alternate payee is a minor or is legally incompetent, the order can require payment to someone with legal responsibility for the alternate payee.
7. Why should I get a QDRO now rather than wait until my former
spouse retires or I need the money?
Delaying in obtaining a QDRO may result in losing valuable rights and you risk forfeiting benefits awarded in the divorce. The process of obtaining a QDRO should be completed early in the divorce process and occur at the same time as the parties negotiate the division of marital property or other divorce-related issues. If the QDRO is not completed before the divorce, it should be completed soon thereafter under the terms of the agreement.
8. Can a QDRO cover more than one plan?
A QDRO can assign rights to retirement benefits under more than one retirement plan of the same or different employers as long as each plan and the assignment of benefit rights under each plan are clearly specified.
9. How long does it take to obtain a QDRO?
The process normally takes 3-5 months. The QDRO should be pre-qualified by the plan before it is filed with the court.
10. Who determines whether an order is a QDRO?
Under Federal law, the administrator of the retirement plan that provides the benefits affected by an order is the individual initially responsible for determining whether an order qualifies as a QDRO. Plan administrators have specific responsibilities and duties with respect to determining whether a domestic relations order is a QDRO.