What Is a QDRO? How Divorce Affects Retirement

What is a QDRO? If you have a retirement account, and you're facing a divorce, you may become quite familiar with this acronym, which stands for Qualified Domestic Relations Order.

A QDRO is a court order that allows an alternate payee -- a spouse, an ex-spouse, a child, or some other dependent -- to collect money from a retirement account. This may be needed for spousal or child support, for example. In some states, a retirement account may also be considered community property that must be divided upon divorce.

Because QDROs can be complicated, it’s probably wise to consult an attorney experienced in dealing with them. But here is some basic information about QDROs:

What Qualifies as a QDRO?

In general, a QDRO is a court-issued judgment, order, or decree that formally approves a property-settlement agreement that involves a retirement plan. A QDRO must contain the following information:

• 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 amount or percentage, or method for calculating the amount or percentage, to be paid to the alternate payee;
• The number of payments, or time period, covered by the QDRO.

How Does a QDRO Work?

A QDRO generally describes how retirement assets will be divided between the retirement plan's participant and his alternate payees. A QDRO is required for any retirement plan covered by ERISA, the Employee Retirement Income Security Act.

The plan's administrator must approve the QDRO, provided it meets certain requirements. QDRO transfers from a retirement account do not incur an early-withdrawal penalty.

How Do QDROs Get Drafted?

Plan administrators may provide QDRO forms that participants can fill out on their own. But because there are a number of legal requirements for what a QDRO must contain, it's probably best to speak with an attorney about drafting a QDRO that meets your specific needs.

Related Resources:

• Dealing with a divorce? Get your case reviewed for free now. (Consumer Injury)
• FAQs About Qualified Domestic Relations Orders (U.S. Department of Labor)
• Getting to Know QDROs: An Important Acronym in Divorce Cases (FindLaw)
• How a QDRO Can Protect Retirement Assets During a Divorce (FindLaw)
• Retired and Working Again: Social Security Rules (FindLaw's Law and Daily Life)