What is a QDRO and Why Do You Need One When Getting Divorced?

401(k)s, IRAs, and pensions are often among the most valuable assets a person has, so these assets naturally play a key role when the time comes to divide property in a divorce. If your divorce settlement or court order involves splitting the money in a retirement account, you will need to obtain a qualified domestic relations order (QDRO).

A QDRO is needed because most retirement plan providers will not release funds until they receive a QDRO. The plan provider must receive specific, detailed instructions on how much money to pay out, when to pay it, and to whom. All of that must be spelled out in the QDRO.

What Exactly Is a QDRO?

A QDRO is an order from a judge that authorizes and instructs retirement plan providers on how to divide the money in a plan. QDROs are used for 401(k)s, pensions, 403(b)s, and employee stock ownership plans (ESOPs). If an IRA is involved, you will need an additional order called a “transfer incident to divorce,” which does the same thing as a QDRO.

QDROs Are Not Automatically Created

By some estimates, around 25 percent of spouses never receive the retirement assets to which they are entitled because they never obtain a QDRO. Spouses don’t realize they need one, and inexperienced lawyers may not realize QDROs are separate from the divorce decree, so an order is never obtained.

QDROs Must Be Precisely Written

Judges sign QDROs, but they are usually written by attorneys. These orders can be very complicated because of the nature of financial accounts, so your lawyer must have a strong understanding of retirement plans before trying to write one. 

When writing a QDRO, our Texas attorneys cover all the bases, including:

  • Reviewing your divorce decree or settlement
  • Planning for different possibilities, such as the death of your spouse or what happens if your spouse works beyond retirement age
  • Drafting a QDRO that covers each account type and the timing of payments
  • Getting signatures from all necessary parties
  • Transmitting the order to the judge for signature
  • Transmitting the QDRO to the retirement plan provider for processing

If Your Spouse’s Lawyer Writes a QDRO, Get it Reviewed

QDROs are written by lawyers, so they are not neutral documents. If your spouse’s attorney drafts one and presents it to you, make sure you have your own attorney review it. You need your own lawyer to make sure there isn’t something buried in the QDRO that could hurt you.

Our Fort Worth QDRO Attorneys Can Help

At Schneider Law Firm, our Fort Worth attorneys have extensive experience preparing and reviewing QDROs for clients. We understand all the different retirement plan types and how to craft QDROs that accomplish your goals. Call 817-799-7125 or contact us online to schedule a free initial consultation at our Fort Worth office.