What is a QDRO? Well, the correct use of a Qualified Domestic Relations Order (“QDRO”) allows a person to divide a pension or 401(k). In the Federal Code, ERISA § 206(d)(3)(B)(i); IRC § 414(p)(1)(A), a “qualified domestic relations order” (QDRO) defined. Feel free to look it up.
Long story short, you divide the retirement without having to pay taxes on it. That’s the whole point, right? There should be no income tax to be paid when the retirement is divided. No, instead the QDRO takes a portion of the retirement and turns it into your own personal retirement account to do with what you will.
QDROs should generally be completed prior to the divorce being final. The divorce is final when the Court signs and enters the final decree into the record. Before that happens, a proposed QDRO should be completed and offered to the plan administrator (the person in charge of managing the retirement account.) Once approved by the plan administrator, the Court may enter the QDRO by signing it and entering it into the record. At that point, the parties should feel comfortable that the process is final and can go ahead and enter the final decree of divorce.
On the other hand, if a QDRO is not completed before the divorce is final, there can be BIG problems. One party may drain the account, or one party may receive more than they were otherwise entitled. Sometimes, there is difficulty getting the QDRO completed. It takes information from both sides to complete the QDRO, and the plan administrator generally needs cooperation with the employee, a.k.a. the Ex.
If the Ex will not cooperate, the only option is more contesting in court. That means a Petition to Enter, service of citation, a hearing. Essentially, your going back to court for a mini-divorce. Your attorney should discuss this issue and make sure you are aware of the necessity of a Qualified Domestic Relations Order, and why it is important to handle it before the divorce is final. Not only does it assure that your QDRO is processed most efficiently, but it also assures that the correct language was included in the final decree of divorce.