Couples who go through a divorce have to divide all of the marital assets during property division process. For many marital assets, this process is fairly simple and can happen without a lot of extra work. Retirement plans are one notable exception to this because they require you to have a special order if they are going to be split.
The qualified domestic relations order (QDRO) sets the legal standard for how these accounts will be divvied up due to the divorce. It names an alternate payee who gets a specific percentage or dollar amount of the retirement plan.
In order to be valid, the QDRO must contain the name and address of the person who holds the account and the same information for the person who is now the alternate payee. It should also outline the specific award for the alternate payee.
When the order is created, it must be done by the court. An attorney can draft it, but the court has to approve the order. It is then sent to the plan administration who has to accept it. If it isn’t accepted by the administrator, you must get specific information about why and how to correct the problem.
Remember, these retirement accounts are only one component of property division. You must ensure that the overall order is in your best interest, especially if you are working on it through mediation or a collaborative method. You don’t want a property division settlement that is going to create stress for you later in life, so think carefully about the long-term impact of it.