A qualified domestic relations order (QDRO) is a legal tool that helps to make sure certain retirement plan providers pay out benefits as outlined within a divorce settlement agreement. Anyone that is getting a divorce should know about these documents and when they need one. Without one, the retirement plan may not pay out as outlined by the divorce settlement agreement.
Isn’t the divorce settlement agreement enough?
When it comes to certain retirement assets, the divorce settlement agreement is not enough. You need to have a QDRO, or you may not get the payments you plan on from that retirement asset.
This court document forces the plan provider to recognize some who is not listed on the plan, known as the “alternate payee.” With this document, that alternate payee can get their agreed upon share of the benefits. Without it, the retirement plan administrator may deny your claim.
What exactly is a QDRO?
It is a court order, judgment or decree that follows the state’s domestic relations law and is issued by a state authority, like a court. A QDRO allows a retirement plan administrator to make payments to someone other than the listed beneficiary. It applies to different retirement plans, most notably pensions. Alternate payees can include a former spouse, child or other dependent.
The QDRO generally includes the following:
- Contact info of the alternate payee
- Name of plans covered by QDRO (it can cover more than one but must be specific)
- Amount of the benefit to go to the alternate payee
The QDRO will also outline how long the alternate payee gets to receive these benefits. This could be until the alternate payee receives a certain amount or for a certain, set period of time.
How do I get a QDRO?
Not every family law attorney is comfortable putting together a QDRO. Although the requirements noted above seem relatively straight forward, a failure to properly draft the document within the rules can result in a denial of benefits. As such, it is not uncommon for those going through a divorce to hire legal counsel that specializes in this niche area of family law to draft a QDRO for their divorce.
What if my QDRO is not honored?
You can challenge a retirement plan administrator’s failure to provide benefits as outlined within the QDRO. The United States Department of Labor notes that the right path to challenge this decision is generally within the Federal court system.