What Is a QDRO?

A Qualified Domestic Relations Order (QDRO) is a legal decree that recognizes an individual's right to receive a portion of their spouse's retirement plan benefits during a divorce or legal separation. A QDRO is a specific type of court order that is issued as part of divorce proceedings. It allows for the direct transfer of retirement benefits from one spouse to another without incurring tax penalties that typically apply to early withdrawals. This process helps to secure the financial future of both spouses after the marriage ends.  This specialized court order grants an alternate payee (former spouse or child) the right to receive all or a portion of the benefits payable to a participant under a retirement plan. This important financial tool ensures that both parties receive fair distribution of retirement assets, which can be a significant part of their overall financial portfolios.

Why Do You Need a QDRO?

  • Asset Division: Retirement accounts often represent a substantial portion of marital assets. A QDRO helps ensure equitable distribution.
  • Tax Benefits: By facilitating direct transfers between accounts, QDROs prevent unnecessary tax liabilities.
  • Legal Protection: QDROs are designed to comply with federal laws governing retirement plans, ensuring that the transfer of benefits is executed correctly.
  • Support: QDROs can also be used to secure support payments in some cases. 

How to Obtain a QDRO?

The process of obtaining a QDRO involves several steps:

Step 1: Initial Review. We begin by reviewing your divorce decree and retirement plan documents to determine the specific requirements for your QDRO.

Step 2: Draft Preparation. We carefully draft the QDRO according to:

    • Your divorce settlement terms
    • Federal ERISA requirements
    • Plan administrator specifications
    • State law requirements

Step 3: Approval by Attorneys and Parties. We circulate the draft QDRO(s) to the parties and/or their respective attorneys for review and approval.  

Step 4: Pre-Approval. When draft QDROs are accepted by the Plan Administrator, the draft QDRO is submitted to the Plan Administrator for pre-approval to ensure compliance with plan requirements and procedures.

Step 4: Court Submission. Once pre-approved by the Plan Administrator, we submit the QDRO to the court for final approval.

Step 5: Implementation. After court approval, the QDRO is sent to the Plan Administrator for implementation and benefit distribution according to the order's terms.

What Types of Accounts Can be Divided with a QDRO?

Here are some of the most common accounts that can be divided with a QDRO:

  1. 401(k) Plans: Employer-sponsored retirement plans where contributions are made from both employee and employer.
  2. Pension Plans: Traditional defined benefit plans that provide a specified monthly benefit upon retirement.
  3. 403(b) Plans (or a Tax-Sheltered Annuity): Retirement plans for certain employees of public schools and tax-exempt organizations, similar to 401(k) plans.
  4. Profit-Sharing Plans: Plans where employers contribute a portion of their profits to employees' retirement accounts.
  5. Cash Balance Plans: A type of pension plan that provides a specified benefit at retirement, with contributions credited to individual accounts.
  6. Other employer-sponsored retirement benefits. 

It's important to note that QDROs do not apply to all retirement accounts. For instance, Individual Retirement Accounts (IRAs) are typically divided through a different process and do not require a QDRO. Instead, they may be divided via a simple transfer or direct rollover process. Our office is able to assist with this process as well. 

Other types of Retirement Plans also require Court orders to divide their retirement benefits, however, those Orders may not be called a QDRO. These types of plans include: 

  • Federal and state government retirement plans
  • Military retirement plans, and
  • Railroad retirement plans. 

The process of preparing and implementing these other types of retirement division orders is normally very similar (if not the same) as the process of preparing a QDRO. Therefore, the information provided herein regarding QDROs can also be applied to these orders. 

What is a Certified QDRO Specialist? 

A certified QDRO specialist is a professional who focuses on the preparation and execution of Qualified Domestic Relations Orders (QDROs) in the context of divorce or legal separation. These specialists typically have expertise in family law, retirement benefits, and the specific requirements related to various retirement plans. Given the intricacies of retirement laws and the potential for significant financial implications, hiring a QDRO specialist can help ensure that the division of retirement assets is handled accurately and efficiently, reducing the likelihood of future disputes or complications.

Our QDRO Services

Expert Preparation in drafting comprehensive QDROS (and other applicable Orders for the division of military, railroad and government retirement accounts), reviewing existing QDROs (and other retirement division orders), modifying orders as needed and ensuring compliance with all requirements.

We provide clear explanation of the QDRO process, regular updates on order status, and assistance with Plan Administrator communications.

Every QDRO we prepare includes a thorough review of plan requirements, verification of awarded benefits, clear specification of distribution terms, and protection of survivor benefits when provided for in the original Agreement or Order. 

Contact Thilges Bernhardt & Isaacs, Attorneys at Law, LLC

Navigating the complexities of divorce can be challenging, and understanding the role of QDROs is crucial for ensuring a fair financial settlement. If you need assistance with QDROs or any related legal matters, our experienced team is here to help you through every step of the process. Amberlynn Isaacs is a Certified QDRO Specialist that can help you with any of your QDRO needs. If you are in need of a QDRO or have any further questions, contact us at 913-491-4400 or fill out our online form. We serve clients in Johnson County, Kansas, Jackson County, Missouri, the Kansas City metropolitan area, and surrounding parts of Kansas and Missouri.