What is a QDRO?

Many times, a couple who is going through a divorce or a legal separation will have a lot of their wealth stored up in one or more retirement plans. These sorts of plans can include 401(k)s or other work-related plans, as well as private retirement funds like an Individual Retirement Account, or IRA.

Not surprisingly, Florida law requires that retirement plans be equitably divided between the two spouses. In practice, this means that, unless there is some negotiation, someone who has a retirement plan may be ordered to share all or part of the asset's value with his or her spouse.

When it comes to retirement plans, though, dividing them is only half the battle. Even after a court divides them, there still has to be a separate process for actually getting the administrator who holds the retirement funds to distribute them as the court, or the parties, intend.

This is where a qualified domestic relations order, or QDRO, comes in to play. As the name implies, a QDRO is an order signed by the judge and directed to the administrator of the plan. The QDRO will describe in detail how the administrator should divide the retirement plan pursuant to the underlying divorce decree or settlement.

The QDRO also has other implications under federal law, since it will allow the division to take place free of tax penalties and consequences. For this and other reasons, the administrator must officially recognize that the QDRO is properly drafted or, alternatively, send it back for revisions.

While tough negotiating and assertive advocacy are hallmarks of a skilled divorce lawyer, QDROs are just one example of how family lawyers also must pay careful attention to detail when sorting out their client's financial and legal affairs.

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