Do I Need A QDRO? If So, Who Prepares This Document?

If you are dividing a 401(k) or pension as part of equitable distribution in your divorce, then, yes, you will likely need a QDRO. A QDRO is an acronym that stands for Qualified Domestic Relations Order. The QDRO establishes your soon-to-be ex-spouse’s legal right to receive a designated percentage or portion of your qualified plan account balance or benefit payments. For example, if a husband is to receive 50% of the marital portion of a wife’s 401(k), a QDRO allows that amount to be rolled over to the husband without penalty or taxes (if rolled over into an IRA and not liquidated).

A QDRO for a pension differs by company. Some companies will immediately transfer the amount designated to the non-titled spouse, while other pensions will pay the non-titled spouse at the time that the pension becomes eligible for distribution. It is critical to check with the plan administrator for each plan and QDRO, which is done by a QDRO preparer.

Attorneys do not typically prepare QDROs, as they are prepared by actuaries and companies specializing in QDROs. Attorneys often have QDRO preparers who they work with and contract for these services for a fee. It is common that both spouses share in the cost of the QDRO preparation. When it has been completed, signed, and preapproved by the plan administrator (if that service is offered), the QDRO is entered as an Order by the Court and sent to the plan administrator to be fulfilled.

Diana N. Fredericks, a family law attorney at Gebhardt & Kiefer, P.C. Diana works with clients whose needs lie in all areas of matrimonial and family law.