Qualified Domestic Relations Order (QDRO)

A Qualified Domestic Relations Order (QDRO) is a legal document that is used to divide certain types of retirement benefits as part of a divorce settlement. A QDRO is typically required when one spouse has a pension, 401(k), or other retirement account that is subject to division in the divorce. The QDRO instructs the plan administrator to pay a portion of the benefits to the other spouse, either as a lump sum or as a stream of payments over time. The specific terms of the QDRO, including the amount and timing of the payments, are typically negotiated by the parties as part of the divorce settlement. Once the QDRO is approved by the court and the plan administrator, it becomes a binding and enforceable order that must be followed by the plan. The purpose of a QDRO is to ensure that the non-employee spouse receives their fair share of the retirement benefits, while also protecting the employee spouse’s rights and minimizing any tax consequences or penalties.