The abbreviation QDRO stands for qualified domestic relations order. Many Floridians who live in the Tampa area and other parts of the state will need to be familiar with this term, particularly if they are going through a divorce or legal separation. This is because many of this state’s retirees or soon-to-be retirees have a lot of wealth tied up in pension, 401(k)s or other retirement plans.
As is the case with other marital property, a court will divide up a couple’s retirement plans, or at least a share of them. However, ordinary court orders will not work to convince the administrator of a retirement plan to divvy up the funds.
Under federal law, an administrator may only divide a retirement plan when it receives a valid QDRO. A QDRO is a court order, usually separate from the divorce decree or settlement itself, that specifies to the plan administrator how the retirement plan will be divided. Unlike other court orders, which generally just have to be followed, a plan administrator can choose to accept or reject the QDRO.
The division of the retirement plan is only allowed once the plan administrator accepts the QDRO; otherwise, a transfer of funds to a former spouse may be deemed a withdrawal subject to a tax penalty.
In order for a plan administrator to accept a QDRO, it has to meet certain minimum requirements. It is important that the person who will benefit from the QDRO prepares the order as required and submits it in a timely fashion. An attorney experienced in handling high asset divorces can be very helpful in this respect.