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Going through a divorce is extremely difficult, and the last thing you want to do is try to figure out complex legal issues. Often, divorce attorneys will tell their clients they need a QDRO, but will not take the time to explain exactly what this is. At Hallier Stearns PLC, we take the time to walk you through every step of the way without overwhelming you with legalese.

So what is a QDRO, and when or why would I need one?

What is a QDRO?

A Qualified Domestic Relations Order or QDRO is a legal order, entered as part of a divorce or legal separation, that splits and changes ownership of a retirement plan to give the divorced spouse their share of the asset.

Most tax-deferred retirement plans connected with employment require a QDRO in order to be divided without penalties or taxes occurring on the transfer. A QDRO can be entered by the judge at the time of your divorce or thereafter. Preparing QDROs is a sub-specialty of family law.

How are the shares of the plan divided and are there any fees involved?

If the plan is a defined contribution plan (like a 401(k) or tax deferred savings plan), your share of the plan will be transferred to your own account in a lump sum although you typically can only remove monies from such an account at under retirement age. If the plan is a defined benefit plan (like a pension that pays a monthly amount upon retirement) you will have to wait until you or your spouse reach retirement age as defined by the plan to begin receiving your share of the monthly benefit.

With a defined benefit plan, it is important to remember to address survivor benefits and other plan options in the QDRO so that you properly receive your negotiated share of the monthly benefit.

Contact us at Hallier Stearns PLC for more information.