Family law clients always ask me, “What is a QDRO?” (pronounced informally “Quad-Row”) QDRO is an acronym for Qualified Domestic Relations Order, which is a court order that grants a party a right to a portion of the retirement benefits his or her former spouse has earned through participation in an employer-sponsored retirement plan. Federal law states that a retirement benefit can only be divided between former spouses if there is a QDRO. Retirement plans can be a huge asset in a marriage that may be forgotten in a divorce, so its key for clients to educate themselves on division of this marital asset.
In a divorce, a family law attorney needs to determine what retirement plan each party owns through mandatory disclosure by the formal, legal plan name. It is important to know the value of each plan, the valuation date used to value the plan, what ancillary benefits are associated with the plan (for example, market fluctuations, survivor benefits, subsidies/supplements, and interest credits), the correct method of division for the plan, and will the retirement plan accept a QDRO. Disclosure is important in obtaining this information and the plan’s summary description. It is also important to obtain the plan’s divorce transfer and QDRO guidelines, if available. Obtaining a statement for the plan as of your desired valuation date will assist you in a smooth QDRO process. For federal government employees, retirement plans are divided by a COAP, which stands for Court Order Acceptable for Processing.
Your divorce decree will not be enough to divide a retirement benefit in most cases. A QDRO is a separate document from the divorce decree. It is always better to file a QDRO with the retirement plan as soon as possible. If the former spouse retires after the divorce is final, and the QDRO has not been filed with the plan, the plan will begin paying out the benefit to the former spouse and only future payments will be affected.