The QDRO
What is a QDRO?
A QDRO or “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 that includes certain information and meets certain other requirements.
A domestic relations order is a judgment, decree, or order (including the approval of a property settlement) that is made pursuant to state domestic relations law and that relates to the provision of child support, alimony payments, or marital property rights for the benefit of a spouse, former spouse, child, or other dependent of a participant.
Simply put, A QDRO is a special court order that grants a person a right to a portion of the retirement benefits his or her former spouse has earned through participation in an employer-sponsored retirement plan. QDROs are typically prepared during divorce proceedings, though they can be, and sometimes are, filed years after divorce.
Judicial Order
QDRO judicial orders are entered as part of a property division in a divorce or legal separation that splits a retirement plan or pension plan by recognizing joint marital ownership interests in the plan, specifically the former spouse’s interest in that spouse’s share of the asset. The QDRO provides recognition of spousal ownership interest in a plan participant’s (employee’s) pension plan awards a portion of the plan participant’s benefit to an alternate payee. An alternate payee must be a spouse, former spouse, child or other dependent of the plan participant. A QDRO may also be entered for spousal support or child support.
Employee Benefits/Pension Plans
QDROs apply only to employee benefit or pension plans subject to the Employee Retirement Income Security Act (ERISA), the American federal law governing private sector pensions. Comparable types of orders divide military retirement pay and Federal civil service retirement plans, and for State, county and municipal retirement plans in most States. A QDRO may provide for marital or community property division between the plan participant and the alternate payee, or for the payment of alimony or child support to the alternate payee.
Order of Process
QDROs must first be issued by a State-level domestic relations court, and are then reviewed by plan administrators for compliance with the terms of the plan and with ERISA or other applicable law. The QDRO may be a separate document or it may be part of a divorce decree, and is valid as long as it meets the standards for a qualified domestic relations order under ERISA and meets the standards of the plan to which it applies, thereby becoming a qualified “QDRO”. Furthermore, although the Courts have jurisdiction to declare a QDRO “qualified” as comporting with federal law, it is the pension plan administrators who must determine whether a QDRO meets the requirements of a specific pension plan under their administration.
If you have a need for a QDRO to be filed or if you have any questions regarding the QDRO and its underlying process, please don’t hesitate to contact us.
Disclaimer:
This document/post/article is not to be considered as legal advice. Content and information contained herein is subject to changes, modifications, and may contain inaccuracies or out-of-date information. As with any legal matter or other matters of importance, consultation with an attorney or professional is the best course of action.