A QDRO is typically a court order that demands that a portion of a retirement plan be paid to another person. This is different from the normal couple’s asset division since it doesn’t make provision for retirement accounts.

In this article, you will learn how QDRO works and how it affects retirement plans. After divorce, the court grants a spouse a percentage of the participant’s investment.

QDRO Requirements

For your QDRO application to scale successfully, it must contain vital information such as the participant’s and alternate payee names, mailing address, and the deserved percentage. Note that the order can not award an amount that is not available under the participant’s specific account.

Why do you need a QDRO?

During or after divorce, some assets are pretty straightforward to divide. Such as deciding who gets the car, the house, or cash. However, not everything is always this simple, especially when it involves dividing retirement savings into employer-sponsored plans.

The good thing with QDRO is that it doesn’t incur any tax penalties, and allows for early withdrawal from a 401K. It is advisable to file a QDRO right after the divorce has been finalized.

Contents of a QDRO

• A valid QDRO must contain some vital information before approval from either the judge or plan administrator. Some of this information includes:
• The names and addresses of the holder of the retirement account, the alternate payee, or perhaps a beneficiary in the absence of the alternate payee.
• The exact percentage of the dollar due to the alternate payee.
• The time frame of which the QDRO applies, not excluding the commencement date.
• What happens in the event of the death of the plan participant and alternate payee.
• What happens when the retirement plan is terminated.

Important payment details, like amount, the frequency of payment, and the form. Note that your order must comply with the plan’s policy regarding QDRO. Work closely with a licensed and experienced attorney to help draft out the order.

Limitation of a QDRO

Though it comes with its benefits, there are also some letdowns. For instance, filling a QDRO on an asset that has already been promised to another via another QDRO is futile. It is important to check the details of the retirement plan.

That is why working with a licensed and experienced QDRO attorney is a must-have. Not only does he save you from common mistakes that could delay your order, but they also walk you every step of the way until you get your reward.

Our attorneys are equal to the task. Go ahead and give us a call, or fill our contact form to get in touch ASAP