What Is a QDRO or “QUADRO”?
/A QDRO (or Qualified Domestic Relations Order) is Court order after a divorce or that splits and changes ownership of a retirement plan to give the divorced spouse their share of the asset or pension plan.
QDROs apply only to employee benefit or pension plans under ERISA.
Retirement benefits are among the largest assets parties can own and these benefits are considered community property unless there is a premarital agreement stating otherwise.
QDROs were created by Congress to allow a Retirement Plan to pay a portion of the retirement fund to the non-employee spouse or the alternate payee. There is no limitation on the amount awarded to a non employee spouse. While many family lawyers may not tell their clients this fact, a QDRO distribution is not limited by federal law to 50% distribution. In fact, under ERISA, the non employee can be awarded “all or a portion of” the benefits payable to or on behalf of a payee. ERISA 206(d)(3)(B)(l)
If you are doing a QDRO yourself, you can request information from the Plan, in writing, including such as the Summary Plan Description and Annual Statement or Account Balance. A word to the wise, do not count on a plan doing the actuarial valuation – that is something you will need to speak with a forensic accountant.
Each retirement plan is different and many have specific rules. For example,in California, there is a joinder process for Family Court and the Court must have jurisdiction over a third party and you must join the Plan before administration.
Additionally, you have to tell the Plan you are asking for a QDRO before you ask for a Court order. It is best to speak with an attorney because you could cost yourself time and money if you simply fill in the blanks of a mock QDRO without carefully tailoring the document to your circumstances. One more thing: QDROs should be filed and served before your divorce is final. Don’t wait to get your QDRO done – if the employee spouse dies before the QDRO is signed – then the non employee spouse will not be entitled to any benefits.