If you or your spouse have retirement accounts and are going through a divorce, you might consider the possibility of seeking a qualified domestic relations order. A QDRO outlines how retirement accounts are going to be distributed, even if the distribution will occur in the future.
Why do I need a QDRO?
A QDRO enables the administrator over retirement accounts to distribute funds in accordance with the document. It also comes into play if you or your ex-spouse gets remarried. This can cut out confusion down the road since everything regarding the distribution of the retirement account is already covered.
What should be covered in a QDRO?
There are four things that the QDRO must include. The name of the plan, the name and last known mailing address of the alternate payee and participant, the number of payments or time period in which the qualified domestic relations order is in effect and the amount that the alternate payee will receive. The amount of the payment can be notated in a percentage format or a dollar amount format.
What else should I know about a QDRO?
Under no circumstance can the QDRO contain points that will increase the benefits. If the alternate payee is a minor or considered legally incompetent, the QDRO can provide that the payments be made to the trustee, guardian or person acting in loco parentis for the payee.
If you are wondering how a QDRO might benefit you or affect your divorce, you should seek answers to those questions. Making sure you understand how it will impact your case might help you to decide how you will handle the issue.
Source: U.S. Department of Labor, “Qualified Domestic Relations Orders,” accessed Sep. 09, 2015