Five Essential Questions
1. What is a Qualified Domestic Relations Order?
A qualified domestic relations order or “QDRO” is a state court judgment, decree or order for a retirement plan to pay child support, alimony or marital property rights to a spouse, former spouse, child or other dependent of a participant.
2. Why is a Qualified Domestic Relations Order necessary?
To ensure that pensions and retirement accounts remain secure, Congress passed legislation which prohibits the alienation or transfer of pension/retirement benefits to anyone other than the participant in the plan. Excepted from the anti-alienation provisions of federal law are spouses, former spouses, children and dependents. For this special class of persons to receive all or a portion of the retirement benefits, a court must issue a QDRO directing the retirement plan to transfer the benefits.
3. When should a Qualified Domestic Relations Order be obtained?
It is highly recommended that the QDRO be issued at or very near the time your decree of divorce is entered. If you are the alternate payee and your spouse dies after your divorce but before the QDRO is approved by the plan administrator and entered as an order, you may lose your right to share in the your spouse’s retirement benefits. Similarly, if the retirement benefits go into pay status before the QDRO is approved, the benefits to which you would otherwise be entitled could be substantially curtailed.
4. Is a divorce required for a QDRO?
A divorce is not required for the issuance of a QDRO. While QDROs are normally associated with the division of retirement benefits during a marital dissolution, QDRO’s can also be issued to pay maintenance during marriage or for the support of children or other dependents. Courts have also issued In-Marriage QDRO’s® to divide qualified retirement plans between happily married spouses.
5. Does a QDRO require a lawyer?
No. A lawyer is not required but highly recommended. Many plan administrators have their own form QDROs that the plan encourages the participant and alternate payee to use. These forms are drafted with the interests of the plan in mind not the participant or alternate payee. Some plan forms are better than others, but many have stock provisions which deprive alternate payees of retirement interests that an independently drafted QDRO would address. If you are in need of a QDRO, please call Las Vegas QDRO’s for a free consultation.