QDROs and DROs

What is a QDRO or DRO?


A QDRO (‘qualified domestic relations order’, and pronounced ‘quadro’) is a court order to a retirement account administrator that tells the administrator how and when to divide retirement benefits such as a 401K between spouses who have divorced. A separation agreement between divorcing spouses that specifies how retirement accounts should be divided is not enough for a pension or retirement plan administrator to divide accounts or benefits. They will only divide retirement assets if they have a QDRO (or equivalent documents such as a DRO or COAP).



What is the QDRO process?


Dividing retirement assets with a QDRO involves multiple steps.


  1. An attorney creates a draft of the QDRO, based on the division of retirement assets specified in the divorce agreement, making sure to include the information and format that your retirement plan requires. Different retirement plans have different requirements for information and format.
  2. If your plan does “pre-approvals” of QDRO’s, you or your attorney submits the draft QDRO to make sure it conforms to their requirements. If you skip this step, your QDRO may be rejected at Step 5, below, and Steps 3-5 will have to be repeated.
  3. Submit your pre-approved QDRO to the court where you divorced along with a jointly assented to motion form.
  4. Receive the signed and certified QDRO from the court.
  5. Send the court signed and certified QDRO to the retirement plan administrator and confirm that they have received it.
  6. Once confirmed, send the pension plan administrator information about the alternate payee (ex-spouse) and the account where the administrator should deposit the alternate payee’s share of the money.



Who needs a QDRO?


You need a QDRO to divide a pension or retirement accounts such as 401k’s, 403b’s, 457’s, and Thrift Savings Plans. You do NOT need a QDRO to divide an IRA—the spouses themselves are the administrators of their IRA’s, so they can divide their IRA’s according to the terms of their divorce agreement without a QDRO. You do NOT need a QDRO if you are sharing a pension by using a present value calculation and buying out the non-participant spouse at the time of divorce.



How much does a QDRO cost?


Attorney Rueschemeyer charges $500 to complete the first 3 steps of the QDRO process. This  leaves you the easy steps of receiving the signed and certified QDRO from the court,  mailing it to your retirement plan administrator, and giving your retirement plan information about the alternate payee and where to deposit the money when it is divided. If you are comparing QDRO prices, be sure to compare how many steps of the process are included. Many QDRO preparers only do Step 1.


Sample QDRO forms for defined benefit (traditional pension) and defined contribution (401k’s, 403b’s, etc.) plans


There are many thousands of retirement plans in the United States, and thousands of different forms and specifications for the QDRO’s or DRO’s that particular pension administrators will accept. Below, you can download 3 sample forms, two of which illustrate ways of dividing defined benefit plans (traditional pensions) and the other of which illustrates several ways of dividing a defined contribution plan (401k’s and similar plan). The way you divide retirement accounts in divorce depends on the type of retirement plan, as explained and illustrated with an infographic at division of marital property in divorce.


The first sample QDRO form for a traditional pension illustrates language for sharing monthly pension benefits when the dollar amount of those benefits has already been determined (e.g., the pension participant has already left service and is not accruing additional pension credits). In this example, the language under Section 6 AWARD OF ALTERNATE PAYEE’S INTEREST, specifies that the non-participant spouse is awarded either a specific dollar amount or a percentage of each benefit payment. For pensions with COLA’s (cost-of-living-adjustments), specifying a percentage assures that the alternate payee shares in the increased benefits over time.


The second sample QDRO form for a pension gives an example of language for dividing future pension payments while the participant is still working and  accruing pension credits. This formulation allows a pension administrator to determine an alternate payee’s share of each pension benefit payment even if the pension participant continued to work for many years after divorce, accruing an ever larger pension. The key language in this example is in Section 6 AWARD OF ALTERNATE PAYEE’S INTEREST, which specifies the formula that the pension administrator should use in calculating the percentage of the total pension benefit that should go to the alternate payee versus the percentage of the total benefit that should go to the participant. The pension administrator must divide the number of pension credits earned during marriage by the total number of pension credits earned by the participant, yielding a marital portion of the total pension, i.e., the fraction of the percentage that belongs to the marriage. In many cases, this marital portion of the pension is then divided 50-50 between the (ex-)spouses.


The third sample QDRO form 401k-type shows language for several different ways of dividing a 401k-type (“defined contribution”) plan. In Section 3, Amount of Alternate Payee’s Benefit, this QDRO template illustrates language for 4 different ways of dividing a 401k-type pension savings plan. The differences in these ways have to do with two variables: whether 1) the alternate payee receives a percentage or a specific dollar amount of the 401k balance, and 2) whether or not the amount of money specified in 1) is adjusted for gains or losses in the account that occur between the date of the agreement and the date that the money is actually transferred to the alternate payee.