When couples are in the midst of their divorce and hashing out the terms of their property division, they may hear an attorney say they will need a “QDRO”. They wonder what that is and why a QDRO is important.
What is a QDRO?
A Qualified Domestic Relations Order (QDRO), or Domestic Relations Order (DRO) is a court order that is necessary when the division of retirement accounts of one or both spouses are part of the divorce settlement. These orders are separate from the final divorce order.
Why A QDRO is Important?
When the settlement agreement includes the division of one or both spouses’ employer-sponsored retirement plans, the only way those plans can legally be divided is through a QDRO separate from the final divorce decree.
In most retirement benefit plans through an employer, the employee spouse is termed the “participant.” The non-employee spouse is referred to as the “alternate payee.” Federal laws that apply to certain types of retirement plans prohibit the plan from paying benefits to anyone other than the “participant” unless the plan has been directed to do so by a QDRO.
If there is no QDRO, then the administrator of the retirement plan has no authority to distribute funds to anyone other than the participant. The final divorce decree is insufficient to cover the terms of the retirement plan division and insufficient to give the administrator the authority necessary to distribute the funds.
Who Should Prepare the QDRO?
The rules governing retirement plans are complicated. They change frequently. In California, there are hundreds of companies that offer retirement plans as a benefit to their employees. Each one has its own unique requirements that the QDRO must relate to. There is no one-size-fits-all pattern to follow in drafting a QDRO. The QDRO must meet the specific legal requirements of the plan that is being divided.
When Should a QDRO be filed?
If the QDRO is issued at the time of the divorce, or at least within six months of the final divorce order, the division will go much smoother. It generally takes from three to six months to prepare the QDRO and for the court to approve it.
Most family law attorneys do not prepare QDROs. They send their clients to an attorney that specializes in preparing these orders.
At the Law Office of Rebecca M. Medina, we have expertise in preparing complex QDROs for our clients. We also accept referrals from attorneys who ask us to prepare QDROs for their clients. For answers to your questions about QDROs, contact us to schedule a consultation.