What is the QDRO Process?
A qualified domestic relations order (QDRO) is an essential part of any divorce that includes a division of employer-provided retirement plan, such as a pension or 401(k). It is only through the use of this specially drafted order that this type of retirement plan can be divided between the spouses. Although an Order signed by a Judge, the QDRO is not prepared by the Court. Rather, you are required to submit one for the Court’s approval. Because the retirement plan must also approve the QDRO, Court-approval alone does not guarantee success.
Why Do You Need a QDRO?
Employer-sponsored retirement plans are governed by federal and state laws that protects retirement from assignment, so creditors cannot access them. Because of this, the only way they can be divided in a divorce or legal separation is through an exception in the laws that permit their division through the use of a QDRO or DRO. A QDRO is a technical order created in a divorce to divide these retirement plans between the spouses.
How a QDRO Is Created
A QDRO is only used when there is a divorce or legal separation, and either a settlement or a judgment has been reached, determining how employer-sponsored retirement will be divided. The QDRO is the document submitted to the Plan that allows the division of these assets.
Your attorney follows the following steps:
- Determining the retirement assets of the marriage
- Determining the marital component of the retirement assets
- Developing a strategy for how retirement assets should be divided or offset
- Negotiating a settlement for or arguing a case about the division of all the marital assets, including the retirement assets
- Finalizing the division of assets in the divorce by obtaining a judgment of divorce
- Drafting the QDRO document to reflect the division of the asset the parties have agreed on or which the court has ordered
- Getting approval of the document by the opposing attorney
- Getting approval of the order from the retirement plan administrator which can take four to six weeks or more. If changes are requested, then making those changes and resubmitting the QDRO for approval from the plan
- Having the judge sign the finalized, approved order
- Filing the signed order with the court
- Requesting and obtaining a certified copy of the court-signed order
- Sending the certified copy of the order to the plan administrator for processing
- Evaluating the plan administrator’s interpretation letter stating their understanding of the order
- Answering any questions from the client
Why QDROs Are Complex
As you can see, the process for getting a QDRO in your divorce case can be very complex. This is the case because the QDRO must be created as an entirely separate document in addition to the judgment of divorce. The document itself contains highly technical language, and each plan has its own unique language that must be used exactly as the plan requests, or it won’t be accepted, and the money cannot be assigned.
QDROs are a highly specialized area of divorce law. Divorce law itself is a very unique and separate field. QDROs are a niche unto themselves within divorce law. Clients should never attempt to prepare a QDRO on their own. If the order is not prepared correctly and timely, the retirement funds will not be divided – and in the worst of cases, never.
If you have retirement funds as assets in your divorce, it is crucial that you work with an attorney who can evaluate the holdings, advise you as to your rights, and take the proper steps to ensure that the retirement asset is not only included in the divorce, but that the QDRO is properly completed and filed so that the funds are shared.
Burnham Law attorneys have years of experience handling divorces involving retirement assets requiring QDROs. Our team is ready to take your case and move things along so that you get everything you are entitled to.
If you are considering a divorce or have decided you want a divorce, contact our office online or at 303-647-9767 to schedule an appointment. Retirement assets are often one of the most significant assets in a divorce. Make sure yours are not overlooked.