When a divorce is imminent, a retirement account can become a critical factor in the plan for separation, particularly if the plan has been well-funded over the duration of the marriage.
A qualified domestic relations order (QDRO) is thought by many to be used only in situations where there are child support or alimony issues. However, a QDRO can also enable spouses to ‘share’ the funds of a retirement account. In brief, the QDRO provides “marital property rights for the benefit of a spouse, former spouse, child, or other dependent of a participant.” (Department of Labor)
The QRDO is a legal document “ 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…” (Department of Labor)
The QDRO must meet certain stringent requirements and includes specific information.
Because retirement plans differ (for example – government plans, military plans, ‘standard’ plans, fire/police pension plans, public school retirement plans- to name just a few) the QDRO is unique in its legal requirements and forms can vary by state and by plan.
Noteworthy is that the mention of a retirement account in a divorce decree or separation agreement may not protect your interest and legal rights to a share of funds in a spouse’s retirement plan.
If you have a separation agreement, the QDRO should be drafted and signed as soon as possible.
It is beyond the scope of this article to discuss all variations of the QDRO. An older (2014) – (but still helpful)- publication by the Department of Labor titled: QDROs: The Division of Retirement Benefits Through Qualified Domestic Relations Orders (dol.gov – pdf.file) may be a starting point to learn more about a QDRO; however the online brochure/file provides only “general guidance”.
It is best to obtain the advice of a qualified attorney to answer specific questions about the requirement of any QDRO.
Note that the ‘content’ of a QDRO will depend, in general, on the type of retirement plan and the input of the plan’s administrator as well as the "reason" for the QDRO.
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