Some divorces are cut-and-dried, with few lingering issues to settle. Others, however, are far more complex, involving issues that may not be properly addressed even by the final divorce judgment.
Enter the qualified domestic relation order, or QDRO, as it's known in legal circles. It can be included in the divorce or be a separately generated document filed outside of divorce proceedings entirely.
These domestic relations orders establish or acknowledge the right of an alternate payee to be assigned and receive some or all of another person's (usually, but not always, a spouse's) retirement benefits under a particular plan. QDROs must meet specific requirements of the plan and contain certain language and information to be legitimized by the administrator of the retirement plan.
A general property settlement order will not meet the stipulations of a QDRO. Additionally, the only eligible alternate payees are spouses and former spouses, children or other dependents of the plan participant.
All of the following information must be included in a QDRO:
-- Name and mailing address of the plan participant
-- Name and mailing address of each alternate payee
-- Names of every plan covered by the order
-- Exact amount or percentage of retirement benefits to be paid out to alternate payee(s), or the way the percentage or amount is determined
-- Number of payments, or the time frame covered by the decree
The most cost-effective way to handle a QDRO is to include it as part of the final division of the marital property. However, if your divorce did not include a QDRO when one is needed, a family law attorney can prepare one that allows you to receive the retirement benefits to which you are entitled.
Source: U.S. Department of Labor, "QDRO's - An Overview FAQs," accessed Dec. 02, 2016