What is a QDRO and How Can One Help Me?

 Posted on September 09, 2015 in Property Division

A qualified domestic relations order (QDRO) is a legal order that allows an individual to receive money from a retirement account that he or she does not own. This order allows the court to alter a retirement plan's ownership to allow this transfer of money during or after a divorce. When an additional party becomes named as an owner of a retirement plan through a QDRO, he or she becomes known as an alternate payee.

The court may order that a couple sign a QDRO as part of their divorce. This document is a key part of the division of the couple's property – retirement accounts are generally considered to be marital property. Signing a QDRO is a way for the court to guarantee that the spouse whose name is not listed on the retirement account can receive a fair share of the money contained within the account. It can also be used to ensure that the owner's child can benefit from the money contained within the account through child support payments or property transfers.

Dividing a Retirement Plan through a QDRO

How the money in a retirement account is paid out depends on the type of account and the wording of the court's order. For example, the funds in a 401(k) are rolled over into an account in the alternate payee's name through a QDRO. With a pension plan, a QDRO makes the alternate payee an additional beneficiary of the plan's funds. Even with a QDRO in place, the money contained in a retirement account is generally not available until the holder retires.

A retirement plan might not be simply split in half during a divorce. In Illinois, a divorcing couple's property is divided according to the principle of equitable distribution, which means that each partner receives a portion of the marital property that the court feels is appropriate to meet his or her personal and financial needs after the divorce. A QDRO can state exactly which portions of the funds contained within a retirement account each partner is entitled to receive when the funds become available. If a QDRO's language is vague in any way, an individual could possibly lose thousands or even hundreds of thousands of dollars. This is why it is critical that you discuss your QDRO in detail with a qualified divorce attorney before it is submitted to the court – your attorney can determine whether the language in the document is biased or unfair in any way.

A QDRO must be signed before the couple's divorce is finalized. If you or your spouse have a retirement account, discuss the possibility of signing a QDRO with an attorney as early in the divorce process as possible to ensure that the account is divided appropriately.

Divorce Attorneys in Kane County

To learn more about QDROs and other topics related to the divorce process, contact Goostree Law Group Call us or visit us on the web today to schedule your free legal consultation with a passionate Kane County family attorney at our firm. We understand the issues that you are facing with your divorce – let us provide you with trustworthy, compassionate legal guidance.

Disclaimer: Goostree Law Group uses an outside QDRO consultant to assist in the preparation of QDRO documents.

Sources:

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-QDRO-Qualified-Domestic-Relations-Order

http://www.dol.gov/ebsa/faqs/faq_qdro.html