Must a domestic relations order be issued as part of a divorce proceeding to be a QDRO?

A domestic relations order that provides for child support or recognizes marital property rights may be a QDRO, without regard to the existence of a divorce proceeding. Such an order, however, must be issued pursuant to state domestic relations law and create or recognize the rights of an individual who is an alternate payee (spouse, former spouse, child, or other dependent of a participant).
An order issued in a probate proceeding begun after the death of the participant that purports to recognize an interest with respect to retirement benefits arising solely under state community property law, but that doesn't relate to the dissolution of a marriage or recognition of support obligations, is not a QDRO because the proceeding does not relate to a legal separation, marital dissolution, or family support obligation.

What is a QDRO?

At first glance it may remind the audience of math and complicated equations. At a second glance you begin to understand it is more complicated than simple math.

10 things to know about QDROs.

  1. QDRO stands for: Qualified Domestic Relations Order.
  2. QDRO is a document that enforces financial claims of parties involved in a divorce. Married couple are entitled to any financial gains during marriage including pension and 401K. How well the order is spelled out in a divorce determines how strong it can protect a parties financial claim to those assets.
  3. QDRO requires an understanding of both Law and finances in order to be prepared properly.
  4. Not all divorce attorneys practice preparing a QDRO documents.
  5. A QDRO is needed when a divorce court grants a division of a pension or retirement account a part of a distribution of marital assets
  6. A QDRO can also be used to allow distributions from a pension or retirement account for alimony and child support payments.
  7. A QDRO is a court order.
  8. Drafting a QDRO requires information relating to a specific pension or retirement plan.
  9. Language in a QDRO that distributes a defined contribution plan (such as a 401k-type plan) is different than the language required to distribute a defined benefit plan (such as a pension)
  10. QDROs are more obscure do to their future impact than their immediate effect. Most divorcing couple end their marriage contract before the retirement age. Most often QDROs kick in after the retirement age. This time gape may cause individuals as well as attorney’s to focus on immediate matters rather than long term financial issues
Once a dissolution of marriage has been entered by court there may still be a way to add or change the QDRO language into the settlement. It is crucial that all parties involved to understand and take steps in order to protect their right to any 401K or pension they are entitled to. If you are involved in a divorce through a mediator makes sure the QDRO agreements are well defined. Consult with a divorce attorney that understands QDRO from a financial point and a legal one. If not you may end up loosing a large portion of your financial settlement.

May a QDRO be part of the divorce decree or property settlement?

There is nothing in ERISA or the Code that requires a QDRO (that is, the provisions that create or recognize an alternate payee's interest in a participant's retirement benefits) be issued as a separate judgment, decree, or order. Accordingly, a QDRO may be included as part of a divorce decree or court-approved property settlement, or issued as a separate order, without affecting its qualified status. The order must satisfy the requirements described above to be a QDRO.