A retirement plan can be one of the largest assets in a marriage. Despite this, retirement accounts are sometimes overlooked during the divorce process, in part because asset division can be complicated and in part because a divorce can happen years before one or both spouses plan to retire. But forgetting to take a retirement plan into account as part of the division of marital assets during the divorce process can negatively impact your retirement security.

What is a QDRO?

A qualified domestic relations order, or QDRO, is a special court order that grants you a right to a portion of the retirement benefits your former spouse earned through participation in an employer-sponsored retirement plan. Although QDROs are typically prepared during a divorce proceeding, they can also be filed years after a divorce is finalized.

In a QDRO, the person who earned the retirement benefit is called the “participant”, and the person who is designated to receive a share of that benefit is called the “alternate payee”.  A QDRO can award benefits to the alternate payee while the participant is alive, as well as survivor benefits if the participant dies.

Note that “QDRO” is the formal term for a domestic relations order that has been accepted by a retirement plan sponsored by a private employer, such as a corporation or non-profit organization. Other types of plans may use different terminology. For example, retirement plans for federal government employees refer to these court orders, once accepted, as a “COAP” (or Court Order Acceptable for Processing).

Why would I need a QDRO?
If a divorce is finalized without a QDRO, the former spouse has no right to the participant’s retirement benefits. After a divorce is finalized, the only way to get a QDRO is to reopen the divorce settlement, which can be very expensive and take years to accomplish.

It’s important to recognize that while a retirement benefit may be addressed in a divorce decree, a former spouse may have no right to a benefit unless the retirement plan has a QDRO on file.

How do I get a QDRO?

  • Find an attorney. The first step is to find an attorney to assist you. If you’re already in the process of divorcing, let your attorney know that retirement assets are involved and that a QDRO will be needed.
  • Inform the court. If you are representing yourself without the assistance of an attorney, be sure the court knows that your spouse earned a retirement benefit, and ensures that your former spouse provides all information the court needs to properly divide the benefit.
  • Contact the plan.  If you’re unclear about your spouse’s retirement benefits, or if your divorce has already been finalized without a QDRO, contact the administrator of the plan directly. As a prospective alternate payee, you are entitled to information about a spouse’s or former spouse’s benefit. Plan administrators may be reluctant to provide information for fear of violating the participant’s privacy, but there are specific Department of Labor regulations giving you a right to this information.

What should a QDRO include?
There hundreds of thousands of private retirement plans, and virtually every one has its own rules for what information must be included in a QDRO. However, there are a few basic elements that every QDRO must contain.  All QDROs must include the following:

  • The name and last known mailing address of the participant and alternate payee;
  • The name of each plan to which the order applies;
  • The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee; and
  • The number of payments or time period to which the order applies.

Note that a separate QDRO is needed for each retirement plan.

What do I do once I have a QDRO?
Once you have your QDRO, you should submit it to the plan administrator as soon as possible. The plan administrator should in turn let you know within a reasonable amount of time whether it has accepted the QDRO. If the plan administrator accepts the QDRO, you do not need to take any additional steps. If the plan administrator rejects the QDRO, it must provide a clear explanation for the rejection, including information on what you need to do in order to improve the QDRO so that it is accepted by the plan.