COLLECTED WISDOM™ on Qualified Domestic Relations Orders -- QDROs

You are the plan administrator for your company's retirement plan. A plan participant comes to you for information and advice about the possible effects that an impending divorce might have on his benefits. What does the Employee Retirement Income Security Act (ERISA) require of you? Here is some information that will help.

This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.

Abusive QDRO Scheme Messes With Texans' Retirement Savings

The American Retirement Association was recently informed of a legal scheme in Texas -- a community property state -- that allows younger workers to raid up to 100% of their defined contribution plan account balance without incurring the tax penalty for an early, in-service retirement plan distribution. The only catch is that the DC plan participant must be married.

Source: Napa-net.org, August 2023

Secure 2.0's New QDRO Rules: The Mainstreaming of the QLAC?

The regs must be changed to reflect that if a QLAC is issued as a joint and survivor annuity (which it is required to be unless spousal consent is obtained, under plans to which such rules apply), and a divorce subsequently occurs before the date the annuity payments begin, the DRO "will not affect the permissibility of the joint and survivor annuity benefits" as long as that order meets several requirements.

Source: Businessofbenefits.com, January 2023

Improving the Process to Distribute Retirement Benefits Pursuant to a QDRO

One of the hurdles to the sufficient accumulation of retirement savings for the achievement of retirement security is the loss of retirement savings in divorce. Plan administrators are required by law to follow prudent procedures to administer the assignment of retirement benefits under a QDRO. Yet, questions remain as to the extent to which affected parties understand the QDRO process and whether obtaining one is affordable so that its intended goals are met.

Source: Mintz.com, April 2022

Love Hurts: Have Your QDRO Procedures at the Ready

Retirement Plans should ensure they are ready in case the pandemic also leads to an increase in QDROs. Qualified plans that are subject to ERISA are required to have written QDRO procedures to determine whether a domestic relations order submitted to the plan meets the requirements for approval as a QDRO.

Source: Employeebenefitslawblog.com, January 2021

GAO: DOL Could Do More to Help Make QDROs More Accessible

A new report from the Government Accountability Office looks at the barriers people face when seeking to obtain a Qualified Domestic Relations Order (QDRO) and offers recommendations on how the process can be improved.

Source: Ntsa-net.org, September 2020

Few Divorcing Couples Know About QDROs

The GAO sent a report to the Senate Health, Education, Labor, and Pensions Committee, "Retirement Security: DOL Could Better Inform Parties About Dividing Savings," in which it explored how often divorcing parties seek access to their spouse’s retirement savings. The overwhelming result was that very few do. Older couples and women, in particular, are often put at a retirement disadvantage when faced with a divorce, a GAO report finds.

Source: Planadviser.com, September 2020

DOL Could Better Inform Divorcing Parties About Dividing Savings

Many Americans don't have enough savings for a secure retirement and divorce can make it worse if one spouse can't claim some of the other spouse's retirement benefits. A legal tool called a Qualified Domestic Relations Order (known as a "QDRO") can be used to establish such a claim. Getting an order can be complex and costly. Many aren't approved, largely because the submitted orders lack the basic information needed for approval. Fees can be unaffordable for people with low incomes. Information from the DOL may be insufficient to facilitate the order process or determine reasonable fees. This GAO report recommends improving the information available.

Source: Gao.gov, September 2020

Determining the Qualification of a Domestic Relations Order

ERISA requires that all plans have a written procedure to determine whether a DRO is qualified. Because the rules for QDROs are sparse compared to the governance of other areas affecting qualified plans, they are vulnerable to ambiguity. They benefit from a methodical approach developed through specific plan procedures.

Source: Ferenczylaw.com, June 2020

Tips for When the QDRO Process Is Held Up

Retirement plan sponsors and providers have processes in place for qualified domestic relations orders that may be held up right now because the coronavirus pandemic has caused court closures. Plan sponsors may want to consider modifications to qualified domestic relations order processes.

Source: Plansponsor.com, May 2020

Approving QDROs During Court and Government Office Closures

Due to widespread court closures as a result of the coronavirus pandemic, it may be difficult for participants or their attorneys to obtain a certified copy of a domestic relations order that many retirement plans require as part of the procedures for processing qualified domestic relations orders. To address this issue, plans might consider adopting temporary procedures that allow for the continued qualification and processing of QDROs during these extraordinary circumstances without creating permanent exceptions to their normal QDRO procedures.

Source: Morganlewis.com, April 2020

How Does a Participant's Divorce Affect a 401k Plan?

Retirement plans enjoy special protections against creditors and legal judgments; however, there is a very narrow exception that can come into play in domestic relations situations, primarily divorce proceedings. A QDRO is the mechanism the courts can use to divide martial property as part of divorce proceedings.

Source: Dwc401k.com, July 2019

Plan Sponsors: You Should Have a Model QDRO

ERISA requires sponsors of qualified retirement plans to maintain written procedures for the administration of qualified domestic relations orders, and the plan administrator has an obligation to ensure that a domestic relations order received by the plan is "qualified" before making the payments or taking other actions contained in the order. While a plan sponsor is not required to maintain a model QDRO for its retirement plans, the development of a model QDRO can make QDRO administration more efficient and produce better results for both the affected participant and the alternate payee.

Source: Employeebenefitsupdate.com, July 2019

Appellate Court Affirms Award of 401k Benefits Under QDRO Issued After Participant's Death

A federal appellate court has upheld a trial court's determination that a deceased plan participant's former spouse is entitled to part of the participant's 401k plan benefit, even though the participant had remarried and the qualified domestic relations order (QDRO) assigning benefits to the former spouse was issued after the participant's death.

Source: Thomsonreuters.com, June 2019

Bankruptcy Case Highlights Importance of Promptly Transferring Retirement Assets in Divorce

When a couple divorce, it is not uncommon for one partner to have accumulated significantly larger retirement accounts than the other. In such cases the parties generally divide IRA accounts pursuant to Internal Revenue Code 408(d)(6) and/or enter into a qualified domestic relations order to divide a 401k or other qualified retirement plan. The importance of moving promptly to divide and transfer title to retirement accounts in divorce was highlighted in a Bankruptcy Court case from 2018.

Source: Eforerisa.wordpress.com, March 2019

QDROs in 10 Easy Steps

This podcast discusses ten basic steps for how to manage qualified domestic relations orders (QDROs). A QDRO is a judgment, decree, or order for a retirement plan to pay child support, alimony or marital property rights to a spouse, former spouse, child or other dependent of a participant.

Source: Erisapracticecenter.com, August 2018

How to Avoid Mistakes Dividing Up 401k Assets in Divorce

Different types of retirement accounts are subject to different rules. Dividing workplace plans like 401ks and traditional pensions requires a court order that is separate from the divorce agreement. It's important to make sure the attorney drafting that separate document is an expert in this.

Source: Cnbc.com, March 2018

Mitigate Qualified Domestic Relations Order Risk With Best Practices

While QDRO administration can be problematic and time intensive, ERISA and the Internal Revenue Code clearly outline the obligations of a plan administrator regarding QDROs for qualified retirement plans. These obligations must be met by all plan sponsors.

Source: Findleydavies.com, August 2017

Handling QDROs for Your Retirement Plan

When couples divorce, one spouse's retirement benefits may be divided as part of a property settlement. Although federal law generally does not allow plan participants to assign or alienate their retirement plan interests, there is a limited exception. Retirement benefits may be assigned to a spouse, former spouse, child, or other dependent to satisfy family support or marital property obligations through a domestic relations order if the plan administrator determines it is a qualified domestic relations order (QDRO).

Source: Pentegra.com, June 2017

Retirement Benefits and Divorce, Top Tax Issues

If a couple has a joint investment in a retirement plan the plan account can be divided to give each spouse their fair share. To divide the plan account without either spouse incurring a massive penalty for early withdrawal from the account, the couple will need to have a Qualified Domestic Relations Order (QDRO) prepared.

Source: Bsllp.com, May 2017

Divorce & Retirement

Because pension and retirement benefits are not automatically split in a divorce, this short guide emphasizes the importance of these benefits and offers valuable information on marital property, negotiating an agreement, and getting a qualified domestic relations order (QDRO).

Source: Wiserwomen.org, April 2017

The Divorce Penalty: This 401k Fee Can Add Insult to Injury

As more wealth accumulates in defined-contribution plans and divorcing baby boomers move to split it up, more retirement savers are getting to know a little abbreviation that packs a big punch in frustration and exasperation: QDRO.

Source: Bloomberg.com, January 2017

Dividing Qualified Retirement Plan in Divorce Via a Qualified Domestic Relations Order

Fortunately for divorcing couples, there is a mechanism called a Qualified Domestic Relations Order which can be used with qualified retirement plans to divide the assets between divorcing spouses without the funds losing their favorable tax treatment and without application of any early-withdrawal penalties.

Source: Ctlawtribune.com, January 2017

What Is a Qualified Domestic Relations Order and Why Should I Care?

A retirement plan can be the largest asset in a marriage. Nonetheless, retirement plans are often forgotten or overlooked during divorce. A qualified domestic relations order is a special court order that grants a person a right to a portion of the retirement benefits his or her former spouse has earned through participation in an employer-sponsored retirement plan.

Source: Pensionrights.org, November 2016

Beware the Retroactive QDRO

Employers know that they must honor qualified domestic relations orders (QDROs) that assign a portion of a retirement benefit to a participant’s former spouse, known as an alternate payee, when the participant and alternate payee divorce. Those orders by law are not allowed to provide greater benefits than were otherwise provided under the plan. A recent federal district court case ignored that provision when it recognized a retroactive QDRO.

Source: Benefitsnotes.com, April 2016

Appellate Court Weighs In on Posthumous QDRO

Appeals court rules on the validity of certain posthumous qualified domestic relations orders, and whether divorce settlement agreements qualify as or supersede QDROs.

Source: Planadviser.com, July 2015

QDRO Distributions and the Age of 50

A defined contribution plan document generally may call for either waiting until the participant is age 50 or permit distribution of the designated amounts as soon as the order is otherwise deemed to a QDRO. If the document is silent on the issue, the alternate payee(s) must wait until the participant attains age 50 to receive a QDRO distribution.

Source: Mhco.com, December 2014

How to Avoid Errors in QDROs

When it comes to qualified domestic relations orders (QDROs), plan sponsors and recordkeepers need to head off potential issues before they become larger problems.

Source: Plansponsor.com, June 2014

Drafting Qualified Domestic Relations Orders

What is the best way to divide a participant's pension benefits in a QDRO? How much can be given to an alternate payee through a QDRO? What are survivor benefits, and why should a QDRO take them into account? These are just a few of the questions discussed in this FAQ.

Source: U.S. Department of Labor, July 2013.

Qualified Domestic Relations Orders Toolkit

Resources to assist a retirement plan administrator in reviewing and approving domestic relations orders (DROs) relating to the division of retirement plan benefits to determine if the DROs are qualified (QDROs).

Source: Practicallaw.com, May 2013

Domestic Relations Orders

Definition: A qualified domestic relations order (QDRO) means a domestic relations order (DRO) which creates or recognizes the existence of an alternate payee's right to (or assigns to an alternate payee the right to) receive all or a portion of the benefits payable with respect to a participant under a plan, and meets certain requirements.

Source: Retirementdictionary.com, March 2013.

The Division of Retirement Benefits Through Qualified Domestic Relations Orders

This publication provides general information about the qualified domestic relations orders (QDROs) under the provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986. This booklet was prepared to provide general guidance about QDROs to employers, retirement plan administrators, participants, beneficiaries, employee benefit professionals, and domestic relations specialists.

Source: U.S. Department of Labor, June 2012.

Plan Sponsor Basics on QDRO Administration

Morgan Lewis a webinar focused on plan sponsor administration of qualified domestic relations orders (QDROs). Topics discussed included: QDRO basics, including types of benefit divisions (segregated benefits, shared payments, and plan design alternatives); Processes and procedures for QDRO administration; QDROs and nonqualified retirement plans; and, QDROs and equity compensation and other executive programs. Here are the slides from the presentation.

Source: Morgan, Lewis & Bockius LLP, April 2012

Applying the QDROtic Equation in Qualified Plans

The recently decided Fifth Circuit decision, Brown v. Continental Airlines, Inc., demonstrates how nine airline pilots and their spouses creatively used qualified domestic relations orders (QDROs) and state domestic relations law to circumvent the early distribution rules in their retirement plan.

Source: Fox Rothschild LLP, November 2011.

DOL Issues Final Rules on QDRO Distributions

Because the determination of whether a domestic relations order is to be considered a "qualified" order is a fiduciary act under ERISA, article recommends that all plan sponsors review their written QDRO determination procedures and familiarize themselves with the new Rule's requirements and illustrative examples.

Source: Masuda, Funai, Eifert & Mitchell, Ltd, June 2010.

Final Department of Labor QDRO Guidance Issued

The U.S. Department of Labor (DOL) has published final regulations clarifying the rights and obligations of parties seeking to obtain benefits from certain retirement plans under qualified domestic relations orders (QDROs).

Source: Drinker Biddle & Reath LLP, June 2010.

DOL Releases Final Regulations Relating To Time and Order of QDROs

The regulations, which are effective July 30, 2010, are substantially similar to the interim final rule issued in 2007, but several changes were made to the examples given, and one additional example was added.

Source: Sutherland Asbill & Brennan LLP, June 2010.

QDRO's

When you need to transfer an interest in a qualified retirement plan, you'll need to use a QDRO, a Qualified Domestic Relations Order. A short item on QDRO Must Have's, Must Not's, Lawyer Issues, and Issues For You.

Source: Divorceinfo.com.

Seven Key Questions You Need to Ask Before Your Divorce is Finalized

To make an intelligent decision on how to divide a pension, find out what kind of pension it is, how it is funded, how it pays out, and ask these seven key questions before your divorce is finalized.

Source: Women's Institute for a Secure Retirement.

Deferred Compensation, Retirement Plans & Divorce

Deferred compensation refers to pension plans, 401k plans, IRAs and other retirement assets. Such plans are divisible as part of a property settlement in divorce regardless of which party is named on the plan. How they are divided depends on the value and nature of the asset.

Source: Freeadvice.com.

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