What is a QDRO in context of a Carlsbad divorce? How are retirement plans and accounts managed in a San Diego divorce?
A Qualified Domestic Relations Order (QDRO) is a legal order which tells the administrator of a retirement vehicle to divide the plan or account, as well as how to do so. Retirement plans such as a 401(k), pension, public employee or teacher’s retirement system, profit-sharing plan or IRAs will be evaluated as part of the community property division process in your divorce.
Generally speaking, if any plan is initiated or if any marital funds (earnings from the date of the marriage to the date of separation) were contributed to a retirement vehicle during the course of the marriage the asset must be divided between the parties during property division.
What is a QDRO going to accomplish? The QDRO is a specific set of instructions to the retirement plan administrator which contains the orders of the Family Court. It may surprise you to learn that the orders issued as part of your divorce or any agreement reached between the parties are not enough to legally require the plan to divide a retirement asset.
Federal law requires a retirement plan to be divided only by a QDRO issued by a State Court (the Judge in your divorce case). Each plan has it’s own specific QDRO verbiage and structure and these documents must be expertly and accurately completed in order to be enforceable.
What is a QDRO and why do you need to ensure these important documents are part of your divorce? The QDRO is the actual order which tells the retirement plan specifically how to divide the present assets within that plan or account. Retirement accounts often represent some of the highest value assets in a divorce. If a QDRO isn’t expertly prepared and executed you could lose your portion of a substantial asset after your divorce.