A QDRO (pronounced ‘Quad-ro’ for those in the know) stands for a Qualified Domestic Relations Order. This is basically an order from the court that recognizes a non-account holder’s (or an alternate payee’s) right to receive some portion (or even all) of the benefits payable to the retirement plan participant. QDROs are used if you and your divorcing spouse decide to split up certain kinds of retirement plans.
QDROs are specific to each plan, and are often highly complex. They are required to actually award the other spouse the retirement plan (or a portion), even if the parties have included the division in a decree, signed it and had it approved of by a judge. That’s because retirement accounts are very often controlled by federal ERISA law. In fact, retirement plans are not required to follow other orders concerning alternate payees UNLESS it is a QDRO. State courts are permitted to issue these kinds of orders, but they are usually drafted by experienced lawyers or even other companies which specialize in drafting QDROs, usually after preliminary approval by the plan administrator itself.
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