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What is a qualified domestic relations order?

On Behalf of | Nov 24, 2023 | Property division

Many assets must be divided when you’re going through a divorce. For some people, retirement accounts are among the most challenging. Understanding how these accounts are divided is beneficial. 

One thing to remember is that you don’t have to worry about dividing accounts if each party has a retirement account that is roughly the same value. In the absence of that condition, you may need a special court order to have the division handled. This is known as a qualified domestic relations order

How does the QDRO divide the account?

A QDRO can require the retirement account be divided by a percentage or by a dollar amount. Only assets held within the retirement account can be divided, so one spouse can’t claim future deposits into the account unless the order is for a long-term distribution. Most QDROs are a single distribution, which means that one spouse receives their entire due in one transaction. 

Can a QDRO be denied by the plan administrator?

The laws surrounding QDROs are very particular. If the order doesn’t meet the requirements, the plan administrator can deny the order. It’s then sent back to the court for revision. Once everything is in order, the plan administrator will execute the order as stated in the document. 

It’s critical to understand exactly how the QDRO can impact you. Because this is only one part of the property division process, it’s critical for you to look at the entire picture before making any decisions. Having someone on your side who can help you with this is beneficial because you must make logical choices that take your future into account.