What the heck is a QDRO?

Retirement accounts are often a divorcing couple’s largest asset – the home being another.  A QDRO must be entered by the court to divide retirement assets during a divorce in New Jersey.

What does QDRO stand for?

Unless you are going through, or have gone through a divorce, you have probably never heard of a QDRO. It is an acronym for Qualified Domestic Relations Order.

A QDRO is a court order that defines how the assets of the “participant” (the spouse who earned the assets in the plan) is shared with the “non-participant” spouse.

While the process of getting a QDRO in New Jersey is straightforward, it is likely that nuanced and complex issues will arise. First, attorneys negotiate the terms. Then, an attorney or expert drafts the order. When it meets all necessary requirements and is accepted, it is signed by a family law judge.  Then the QDRO is sent to the retirement plan administrator.  The plan administrator is responsible for distributing the assets as directed by the order. There are no tax penalties for distributions to the non-participant spouse if the division is because of the divorce.

Be aware – not all plans can be distributed through a QDRO. Only retirement plans covered by the Employee Retirement Income Security Act (ERISA) are required to have a QDRO. Covered retirement plans may include a pension, 401K plan, 403B plan, or an IRA. Rights of survivorship and cost of living adjustments, early retirement plans, and early retirement subsidies are issues that must be addressed and allocated. Because these issues can be complicated, it is wise to consult an experienced attorney.

Contact me at jlawrence@lawlawfirm.com if you have any questions regarding QDROs and retirement plans in your divorce. I am also available to address other family law matters you have in New Jersey.