QDRO Process Explained: Click here to find out how to get started.

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QDRO

What do I need to know about a QRDO?

The QDRO process can take months to complete making it very important the process is started as soon as possible. Following is a timeline of the process you should expect when filing a Qualified Domestic Relations Order.

Let’s get started.

  1. An attorney experienced in drafting Domestic Relations Orders is identified and engaged by the parties.
  2. The QDRO Specialist drafts the Domestic Relations Order in accordance with specific plan provisions and the agreements reached by parties to the proceedings.
  3. The parties, together with their respective attorneys and financial experts review and approve the draft document.
  4. The Draft Qualified Domestic Relations Order is submitted to the Plan Administrator for pre-approval.
  5. The Plan Administrator responds to the drafter with any necessary revisions.
  6. Requested revisions are made to the QDRO and the revised copy is sent to parties and attorneys for review and signature.
  7. The approved QDRO is signed by both parties and sent to the court for the judge’s signature.
  8. A copy of the singed and court certified Qualified Domestic Relations Order is sent to attorneys or parties.
  9. The certified singed copy of the QDRO must be sent to the Plan Administrator for processing. Some QDRO experts will send the approved document to the plan administrator for the clients. Make sure you know who will take on the responsibility and do not make assumptions.
  10. The Plan Administrator will send a letter to the participant and alternate payee with instructions on how to access the plan and a timeline for completion of the division. It may be necessary for the Alternate Payee to stipulate an outside account for benefits to be rolled to.
  11. The Plan Administrator calculates the division of the plan pursuant to the QDRO and creates a separate account for the Alternate Payee.
  12. The Alternate Payee will receive confirmation that their benefits have been partitioned into a separate account or rolled over into the account previously stipulated.

 

For more information about the Qualified Domestic Relations Order and how it can affect you, visit our article Retirement Accounts & Divorce: Why you need a QDRO.

 

At Wellspring Divorce Advisors, we use state of the art divorce financial planning and forecasting tools for long term projections, retirement plan valuation, support scenario comparisons, and negotiation tools including child support and alimony guidelines. Click here to find out how we can help you.

What is a Qualified Domestic Relations Order?

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Retirement plans such as 401(k)’s and defined benefit pension plans are often among the largest assets to be divided during the division of a martial estate. Many of these plans are governed by a set of federal laws known as the Employee Retirement Income Security Act of 1974 or ERISA. ERISA allows an Alternate Payee such as a former spouse to receive a portion of the employee’s benefits with a court order. A Qualified Domestic Relations Order (QDRO) is the court order required to give notice to a retirement plan administrator that an Alternate Payee is entitled to a portion of the plan. Without a QDRO the plan administrator cannot legally make payments to the Alternate Payee.

Who Should Draft My QDRO?

A Qualified Domestic Relations Order should be drafted by an attorney familiar with this subset of legal practice. The drafting of a Qualified Domestic Relations Order is an important step in the divorce financial planning process. Financial planners have specific and far reaching knowledge of retirement plans and the underlying laws that govern them but are ill-equipped for drafting the actual Domestic Relations Orders as they are usually not attorneys.

For a QDRO to be valid and accepted by both the court and the plan administrator it must contain specific requirements under the law as well as be tailored to that specific plan. Retirement plans may even reject court certified orders that were not pre-approved by their own staff. For this reason it is necessary for a draft to be sent to the plan administrator for pre-approval prior to seeking court certification.

Wellspring Divorce Advisors suggests the qualified domestic relations order be drafted and pre-approved prior to finalizing the global financial agreements. We have seen many individuals still fighting to get their share of the retirement plans awarded to them years after settlement because the other party refuses to sign. See more on the QDRO Process here.