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Delaying Starting The QDRO Process: Understanding The Risks Involved


Experiencing a divorce can take a toll on one’s physical, mental, emotional, and financial well-being. As the divorce case comes to an end, it often brings a mix of relief and a reason to celebrate. However, this moment can also be overwhelming when individuals discover that there are still important tasks left to address. Many divorcees may not realize that they have overlooked crucial steps in finalizing the division of their retirement accounts during the divorce process.

Upon learning that there’s unfinished business and a requirement for a “QDRO” – short for “Qualified Domestic Relations Order” – which is a specific court order necessary to complete the division of most retirement accounts either during or after the divorce proceedings, people frequently set the matter aside, relegating the division of their retirement accounts to a lower priority.

Numerous scenarios exist in which the retirement benefits granted to you could undergo substantial and, in some cases, irreversible impacts:

A) Liquidation.

Failing to promptly process your QDRO can lead to significant consequences if your ex-partner decides to cash out the retirement account. In such a scenario, your options to recover the funds may become severely restricted. Typically, this situation necessitates returning to court to pursue the owed amount. However, if the funds have already been depleted, the process can be incredibly challenging, time-consuming, and financially burdensome. Moreover, there is a possibility that you may not be able to retrieve the entirety, or even any portion, of the funds rightfully entitled to you during the divorce.

B) Change of Plan Record keeper.

Imagine you got divorced in 2010 at the age of 30, and as part of the settlement, you were entitled to receive 50% of your former spouse’s 401(k) plan, subject to market fluctuations. However, you never completed your QDRO at that time, thinking you had plenty of time to do so, as your former spouse’s retirement was still two decades away. Fast forward to 2018, and your ex’s employer changes the plan recordkeeper from Fidelity to Vanguard.

Now, you might be wondering why this change in recordkeeper matters. The issue arises because the new recordkeeper cannot calculate gains and losses that occurred before they took over the management of the 401(k) plan. Consequently, even if your portion of the account experienced significant growth from 2010 until now, your current QDRO is likely to be rejected by the Plan Administrator in this situation.

As a result, parties are often compelled to return to the negotiating table or, in some cases, back to court to resolve the matter. It may even require the involvement of a forensic accountant to accurately calculate the gains and losses. These processes can be both time-consuming and costly.

C) Loss of Benefits.

Delaying the submission of a QDRO until after the Participant starts receiving pension benefits can have significant consequences. In such a situation, you become “locked-in” to the benefit form chosen by your ex-spouse at the time of their retirement. Furthermore, once the Participant has begun receiving benefits from the pension plan, the beneficiary designations for the accounts become irrevocable. This means that any selection made by the Participant regarding who will receive death benefits from the pension after their passing cannot be altered, even with a court order.

As a result, waiting to submit your QDRO not only deprives you of the opportunity to determine how your share of the benefit will be paid, but it also puts you at risk of losing your entitlement to pension survivor benefits in the unfortunate event of your ex-spouse’s demise.

D) Death of a Party.

In the unfortunate event that the Participant passes away before a QDRO is entered and processed, you may become subject to the death benefits that the Participant had previously chosen. If your ex-spouse did not designate you as a beneficiary before their death, you could lose your entitlement to any retirement benefits that were meant to be allocated to you. In some cases, there is a possibility of pursuing an “After-Death QDRO” to secure your benefits, but this process can be notably more intricate and costly. Even then, there’s a risk of losing significant rights, particularly if they weren’t clearly outlined in your divorce decree.

If the Alternate Payee (the recipient of the retirement benefits) also passes away before a QDRO is entered and processed, it can prevent their heirs from receiving any portion of the retirement account(s) that were intended to be transferred during the divorce proceedings.

E) Statutes of Limitations/Laches/Dormancy.

The timeframe in which you reside can play a crucial role in the preparation and processing of your QDRO. Waiting too long might subject you to certain legal limitations such as a Statute of Limitations or defenses like laches or dormancy. Essentially, these legal principles indicate that you have delayed asserting your rights for too long, and as a consequence, you could potentially lose the benefits you were entitled to. It’s essential to be aware that these rules can differ significantly from state to state, so their application to your situation may vary depending on your location.

While the process can be frustrating, ensuring the timely preparation and processing of your QDRO is crucial to safeguarding your rights. One effective method of protecting yourself is to initiate the process by submitting a proposed QDRO to the Plan Administrator. In most cases, upon receiving the proposed QDRO, the Plan Administrator will impose an “administrative freeze” on the account, lasting up to 180 days. This “freeze” typically prevents the Participant from cashing out any funds, initiating loans, or making changes to investment options until the QDRO is fully processed and implemented, or until the 180-day period (depending on the specific Plan) elapses, whichever comes first.

At the Law Office of Rebecca M. Medina, our mission is to empower our clients in securing their rights. We achieve this by promptly and accurately drafting the QDRO at an exceptionally affordable rate, coupled with unmatched customer support. Entrust us with the task of preparing your QDRO(s) and guiding you through the implementation process, allowing us to grant you the peace of mind you deserve.

Avoid falling into the trap of procrastination and frustration, as the potential risks of waiting are too significant. Act now and let us help safeguard your financial future with confidence. Contact our office to discuss your QDRO needs. To schedule a consultation with the Law Office of Rebecca Medina today, call 559-324-5427 in Fresno or 858-285-4315 in San Diego, or visit us online at

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Rebecca MedinaAbout the Author: Rebecca Medina

Rebecca Medina is an experienced Family Law attorney, mediator and Collaborative Divorce Lawyer serving the Fresno and San Diego areas. She handles cases ranging from complex divorce matters to child custody, spousal support, prenuptial/postnuptial agreements, QDROs and uncontested divorce cases. She was rated “Clients’ Choice” by Avvo.

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