What is a qualified domestic relations order?
A qualified domestic relations order (QDRO) is a document that tells a retirement administrator that another person (an ex-spouse) has a right to some or all of the retirement benefits for a person’s retirement account. Each QDRO must contain certain information and must meet different requirements depending on the specific retirement plan.
Why do you need a QDRO? You need a QDRO because even if you have signed a settlement agreement giving one spouse rights to the other spouse’s retirement, the retirement plan administrator is not required, nor allowed to assign retirement benefits to the other spouse unless you have a QDRO. This is true even if you have a court order assigning retirement benefits to one spouse. If an order does not meet the requirements of a QDRO, then the retirement plan will not follow the order. This means that, sometimes, you must create a separate QDRO so that one spouse can receive the other spouse’s retirement benefits.
You can have your settlement/separation agreement, if incorporated into a court order, count as a QDRO. As long as your settlement agreement meets all of the requirements to become a QDRO, you do not have to create a separate order. However, if you decide that you do not want to incorporate your settlement agreement into a court order, then you would need to have an attorney create a separate QDRO so you can receive the benefits you are entitled to.
So, who decides whether an order is a QDRO? The plan administrator of the retirement plan or plans you are trying to transfer benefits from will decide whether or not your order is in fact a QDRO. Each plan has its own standards and procedures for making this decision. It is not the state court’s job to decide whether your order qualifies for that plan, which can create some inconsistency and confusion. This is why it is often in your best interest to have an attorney handle your QDRO, so they can make sure all of the steps have been completed and that your settlement agreement or separate domestic order does in fact count as a QDRO to that specific plan administrator.