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Do you need to obtain a QDRO during your divorce?


During your divorce, you want to receive a fair share of everything you and your spouse own. Fortunately, if you cannot reach an acceptable settlement agreement with your soon-to-be ex-spouse, a judge is likely to apply principles of equity and fairness to decide what marital assets go to each of you.

While it may be tempting to focus on your home, cars or even cash, you should not forget to address your retirement accounts. A qualified domestic relations order is necessary for dividing many retirement plans.

The purpose of a QDRO

The funds in your retirement accounts are likely some of the more valuable assets in your portfolio. A QDRO is simply a legal order that directs what happens to these funds. With some retirement accounts, like an IRA, you can typically divide funds incident to your divorce. For others, such as your 401(k), a QDRO is likely a legal requirement.

The process for obtaining a QDRO

To obtain a QDRO, you first need a settlement agreement or judicial order that dictates ownership of the assets in your retirement accounts. Next, either your attorney or your spouse’s writes a proposed DRO. The attorney who drafts the DRO must be certain it parrots the exact language the retirement plan administrator requires.

After you and your spouse agree on the final language of the DRO, a judge must provide his or her signature. Then, a copy of the DRO goes to the plan administrator for execution. Within 180 days, the administrator must qualify the order, converting it to a QDRO and dividing funds pursuant to it.

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