Qualified Domestic Relations Order (QDROs)
QDRO Rules and Payments
A QDRO must meet certain rules under federal law in order for it to be valid and must be issued by a “state authority” (usually a court) through a judgment, order or decree, which addresses a property settlement. Governmental or public retirement plans (e.g., military pensions, federal, state, county or city retirement plans) are not subject to the QDRO rules. These plans typically require a court order for dividing retirement benefits, which resemble QDROs. Since QDROS are governed by federal law, a Qualified Domestic Relations Order in California is basically the same as a QDRO to be filed in other states.
The division of the plan can be calculated several ways. Unless the Marital Settlement Agreement (MSA) or judgment provides a specific dollar or percentage amount payable to the alternate payee, a formula is usually used based upon several variables that instructs the plan administrator how to compute the amount payable to the alternate payee. It is a common misconception that the QDRO will include the amount payable to the alternate payee.
If the plan allows for a lump sum distribution, the alternate payee can elect to receive his or her share in one single payment or to roll over his/her share to an Individual Retirement Account (IRA) or other eligible plan. This is typical of 401(k) or profit sharing plans. Defined benefit plans, however, generally only pay benefits in monthly installments or “annuities.” If the plan will only pay benefits in the form of an “annuity” the alternate payee will typically receive monthly payments for life.
QDRO Process Timeline
A QDRO isn’t always included in the divorce process, and many couples find that after paying high fees to their attorney, that the QDRO is not included or the firm does not prepare them.
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|QDRO with Joinder||$525|
- QDRO – $375
- QDRO with Joinder – $525