Is QDRO Necessary in the Dissolution of a Marriage?

By Jimmy Verner

A Qualified Domestic Relations Order, or QDRO, is not always necessary in a marriage dissolution. A QDRO is required when a divorce court awards part of one spouse's employer-provided retirement plan to the other spouse. If the divorce court doesn't divide the employer-provided retirement plan, or the retirement plan isn't provided by the employer, you won't need a QDRO for your divorce.

Federal Law

A federal law called the Employee Retirement Income Security Act (ERISA) governs how to divide certain types of retirement benefits upon divorce. ERISA applies to employer-provided retirement benefits. There are two types of employer-provided retirement benefits. First is the defined benefit plan, which is the traditional pension. A defined benefit plan pays the retiree a specific amount per month during retirement. The other type of employer-provided benefit plan is the defined contribution plan. In this type of plan, the employer, employee or both make contributions to the plan. Some of the more common types of defined contribution plans are 401(k) plans, 403(b) plans, employee stock ownership plans and profit-sharing plans.

About QDROs

To divide an employer-provided retirement plan upon divorce, ERISA requires courts to use a specific type of court order called a Qualified Domestic Relations Order. QDRO appoints the non-employee spouse as an alternate payee of the retirement plan. The QDRO must identify the parties and state their addresses, retirement plan to which it applies, amount in dollars or percentage of retirement plan being awarded to non-employee spouse, and number of payments or time period involved. The QDRO becomes qualified when the administrator of the retirement plan confirms the QDRO meets the requirements of the retirement plan.

Divorce is never easy, but we can help. Learn More

Dividing Retirement

When dividing defined contribution retirement plans, courts generally divide only what was contributed to them during the course of the marriage, excluding any assets in the plan provided by a spouse prior to marriage. Dividing defined benefit plans -- in other words, pensions -- is more difficult because pension benefits can build up unevenly over the duration of the spouse's employment and usually are not payable until sometime in the future because the spouse has not yet retired. In such cases, the courts attempt to calculate a fraction of the pension to divide based on how long the parties were married as compared with how long the employee spouse worked, and will work, to earn the pension.

Alternatives

At times, divorce courts will not divide employer-provided retirement plans. This can occur when each spouse has his own employer-provided retirement plan and the court awards each spouse his own. As another example, a court may allow one spouse to keep his employer-provided retirement plan and make up its value to the other spouse by awarding her other marital assets. Finally, if a retirement benefit is not employer-provided -- for example, when an individual creates and funds his own IRA -- ERISA does not apply and no QDRO is necessary to divide the retirement benefit.

Divorce is never easy, but we can help. Learn More
How Are Profit-Sharing Plans Divided in a Divorce?

References

Related articles

Divorce Laws and State Pension Plans in Oklahoma

Oklahoma state employees may qualify for state-administered retirement plans, including the Oklahoma Public Employees Retirement System (OPERS) and other retirement systems for teachers, police officers and firefighters. These retirement plans can be one of the biggest assets in a divorce, and they can be split as part of the divorce process.

California Divorce Law & Pensions

Because California is a community property jurisdiction, upon divorce, each spouse is entitled to half of all "community" property acquired during the life of the marriage. This rule applies to pensions; however, the issue is complicated due to the difficulty of determining how and when a pension was earned.

Non-Vested Pension Division During a Divorce

When you divorce, the court will issue a divorce decree that, among other things, divides the property you and your spouse accumulated during your marriage. Like real estate, bank accounts and personal property, pensions are considered property that can be divided by the court. Non-vested pensions can be more complicated to divide because the benefits have not yet been fully earned.

Get Divorced Online

Related articles

How to Split the Pension in a Divorce

Unlike other retirement accounts, dividing a pension is often difficult because it’s hard to place a value on what the ...

Pension Law for a Georgia Divorce

Georgia courts might consider retirement plans as marital property, which is subject to equitable distribution in a ...

After a Divorce Ruling, What Is a QDRO?

A qualified domestic relations order, also known as a QDRO, is a legal document that allows an individual to give ...

Divorce Retirement Questions in Michigan

If you're divorcing in Michigan, you may have questions about how your retirement plan and that of your soon to be ...

Browse by category
Ready to Begin? GET STARTED