A QDRO is a Special Document for Dividing Retirement Accounts in Divorce

A QDRO (“Qualified Domestic Relations Order”) is a document that tells a retirement account administrator how they should divide a retirement account. When you get divorced, for example, your division of marital property may include the division of a retirement account, such as a 401k or 403b. Even if your divorce agreement spells out how the account should be divided, a retirement account administrator will not take money out of a person’s retirement account unless they are given a QDRO. The Employee Retirement Security Act (ERISA) of 1974 was designed to protect a person’s retirement account, and it defines what domestic relations orders count as “qualified” and can be the basis for taking money from a worker’s retirement account.

A QDRO is usually prepared by a lawyer, accountant, or divorce financial expert such as Massachusetts QDRO attorney Julia Rueschemeyer. You do not need a QDRO to get divorced, but you DO need a QDRO in order to actually divide the money. A good divorce agreement spells out the details of exactly how a retirement account should be divided (e.g., Is it a fixed amount? Is it a fixed amount plus gains and losses between the date of divorce and the date of the actual transfer of funds). Many divorce agreements do not provide enough specificity about how the account should be divided. Since QDROs require considerable specificity, the QDRO preparer is sometimes forced to guess at the intentions of the divorcing parties or simply make up some of the details. For that reason, it’s always best to arrange for a QDRO and begin QDRO preparation before the divorce agreement is finalized and signed.

A QDRO typically takes 2-3 months. In theory, it could be done within a week or two, but many different people have to review the document, and each person can easily delay the process by days, weeks, or even months. After the QDRO is prepared, it is sent to both parties and their attorneys for approval. After they have approved it, it is generally sent to the retirement plan for “pre-approval”. This step can take weeks or months, especially if you are dealing with a public pension (rather than a 401k or 403b from a private company). After pre-approval, the QDRO must be submitted to the court where you were divorced for certification by a judge. After certification, the certified QDRO can finally be sent to the retirement account administrator along with information about where the money from the account should be transferred to.