Frequently Asked Questions About Qualified Domestic Relations Orders

A: A Qualified Domestic Relations Order (QDRO) is a court order that directs a retirement plan administrator to divide a retirement plan's benefits between the participant (the employee spouse) and an alternate payee (the non-employee spouse) in a divorce. The QDRO recognizes the alternate payee's right to receive benefits payable under a pension plan.

A: A QDRO must clearly specify:

1. The name and address of both the participant and the alternate payee;
2. The amount or percentage of the participant's benefits to be paid to the alternate payee, or the manner in which the amount is to be determined;
3. The number of payments or period for which payments are required; and
4. The specific name of each retirement plan to which it applies.

A:

• Defined contribution pension plans
• Defined benefit pension plans
• 401(k) plans
• Thrift savings plans

A: This depends on the retirement plan and the QDRO. Some companies allow the ex-spouse to start receiving benefits at the employee's retirement age even if the employee has not actually retired.

A: The present value of a pension plan must be calculated using the earliest date of retirement that can be taken without a penalty or reduction of benefits.

A: QDROs should be drafted by professionals who specialize in QDROs—either an attorney with expertise in this area, or a specialist QDRO drafter. This is a complex area of law and most family law attorneys do not have the expertise to prepare QDROs.

A: The QDRO should be drafted before the parties are divorced and entered in court concurrently with the divorce decree.

Attorney writer experience insight: QDROs are rarely drafted prior to the dissolution and almost always drafted after despite the common guidance to the contrary. It can be difficult to convince the other party to have the QDRO drafted early on.

A: The QDRO should address what happens at the death of the alternate payee—does the benefit revert to the participant, go to the alternate payee's beneficiary, or simply cease? This should be clearly spelled out rather than leaving the document silent on the issue.

A: If the participant is already receiving benefits, the QDRO can direct the plan to begin paying the alternate payee's share immediately if the plan allows for that.