What does QDRO Mean?
A QDRO is short for “qualified domestic relation order“. They are court order judgements to help pay for child support, alimony, and any other entitlement a spouse or former spouse may have. In short, if you are granted a QDRO you are entitled to all or a portion of someone’s retirement plan. This could include a 401(k) or IRA.
Why is a QDRO Necessary
Typically QDROs are seen more often with divorces in an effort to split assets evenly. While not always the case, divorces tend to end with assets being split down the middle. This could include your home, bank accounts, and cars.
A QDRO can help facilitate the split of retirement investment assets.
What does QDRO mean in 401(k)
QDRO stands for Qualified Domestic Relations Order. In the context of a 401(k) retirement account, a QDRO is a legal order issued by a court that establishes the rights of an alternate payee (typically a former spouse or dependent) to receive a portion of the retirement benefits from the account.
When a couple goes through a divorce, the division of assets may include the division of retirement accounts, such as a 401(k). A QDRO allows for the tax-free transfer of a portion of the account balance from the participant’s 401(k) to the alternate payee’s account without incurring penalties or taxes at the time of the transfer.
A QDRO specifies the details of the division, including the percentage or amount to be awarded to the alternate payee. It also outlines the timing of the distribution, whether it should be done immediately or upon the occurrence of specific events, such as the participant’s retirement or death.
By having a QDRO in place, the alternate payee can receive their designated share of the 401(k) benefits directly from the retirement plan administrator, separate from the participant’s account. The QDRO provides a legal framework for the division and ensures that both parties’ interests are protected.
It’s worth noting that QDROs are specific to the United States and are governed by the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. The rules and procedures for QDROs may vary depending on the jurisdiction and the specific retirement plan involved. It is advisable to consult with an attorney experienced in family law and retirement accounts to navigate the QDRO process correctly.
QDRO to IRA

In most cases you do have the options to move the assets from a QDRO into an IRA, or individual retirement account. This can be beneficial for you as you can have more control over the money and investments inside of the account.
IntelliVest Wealth Management helps clients with investing the money from a QDRO to an IRA. Our financial advisor will sit down with you to learn more about your goals and how you need the investments to work for you.
If you want to learn more and get in touch with us about your QDRO, please call us at (864) 598-0000 or contact us here.
Are QDRO Distributions Taxable
Yes, QDRO distributions are taxable to the recipient. Please reach out to your CPA with regards to how a QDRO distribution would impact your tax obligations.
Can a QDRO be Done After Divorce
Yes, a Qualified Domestic Relations Order (QDRO) can be done after a divorce. A QDRO is a legal order that establishes the rights of an alternate payee to receive a portion of a retirement account, such as a 401(k) or pension plan, as part of a divorce settlement.
While it is ideal to complete the QDRO process during the divorce proceedings, it is possible to initiate a QDRO after the divorce is finalized. However, it is important to note that the process may be more complicated and time-consuming after the divorce is completed.
To initiate a QDRO after divorce, you will typically need to follow these steps:
- Obtain a copy of the divorce decree: Ensure you have a copy of the divorce decree, which outlines the division of assets, including any retirement accounts.
- Consult an attorney: Seek the assistance of an attorney experienced in family law and QDROs. They can guide you through the process and help prepare the necessary documentation.
- Draft the QDRO: The attorney will draft the QDRO document, which specifies the terms of the division of the retirement account. It should include the necessary information, such as the names of the account owner and alternate payee, the percentage or amount to be awarded, and the details of the retirement account.
- Obtain approval and signature: Once the QDRO is drafted, it needs to be reviewed and approved by the retirement plan administrator. They will ensure that it complies with the requirements of the specific retirement plan. After approval, both parties should sign the QDRO.
- Submit the QDRO to the court: The QDRO must be filed with the court that handled the divorce proceedings. This step may require paying a filing fee and following the court’s specific procedures.
- Obtain a certified copy: Once the court approves the QDRO, request a certified copy from the court clerk. This certified copy should be provided to the retirement plan administrator.
- Implement the QDRO: The retirement plan administrator will review the certified QDRO and determine the appropriate implementation process. They will then divide the retirement account as specified in the QDRO.
It’s important to consult with a legal professional to ensure compliance with the specific requirements of your jurisdiction and retirement plan. They can provide personalized guidance based on your circumstances and help you navigate the process smoothly.
Who Pays the QDRO Fees in Divorce
The responsibility for paying the Qualified Domestic Relations Order (QDRO) fees in a divorce can vary and is often subject to negotiation or court determination. In general, the allocation of QDRO fees can be addressed in the divorce settlement or decided by the court.
Here are some common scenarios regarding the payment of QDRO fees:
- Shared responsibility: In some cases, the divorcing parties may agree to share the cost of the QDRO fees equally or in a manner that reflects their respective financial situations. This can be negotiated as part of the divorce settlement.
- Participant’s responsibility: In certain situations, the participant (the individual whose retirement account is being divided) may be responsible for paying the QDRO fees. This could be agreed upon in the divorce settlement or ordered by the court.
- Alternate payee’s responsibility: Alternatively, the alternate payee (the individual who is entitled to receive a portion of the retirement account) may bear the QDRO fees. Again, this can be determined through negotiation or by court order.
- Court’s discretion: If the allocation of QDRO fees is not explicitly addressed in the divorce settlement or if there is a dispute between the parties, the court may have the authority to determine who should pay the fees. The court will consider various factors, including the financial circumstances of both parties, in making its decision.
It is important to consult with a family law attorney to understand the specific laws and practices in your jurisdiction and to advocate for your interests regarding the payment of QDRO fees. An attorney can provide guidance and help you negotiate or present your case effectively during the divorce proceedings.
QDRO Without Divorce
According to American Planning of Estate Planning Attorneys, a QDRO without divorce is theoretically possible. Currently, there is no statement from ERISA that limits a QDRO to just a Divorce.
With this being said, it is not very common to do so outside of a divorce settlement.
5 Financial Steps to Take After Divorce
>>Click here for 5 Financial Steps to Take After Divorce.
Disclosures:
IntelliVest Wealth Management is a Registered Investment Advisor Headquartered in South Carolina. This is not financial advice and should be reviewed for educational purposes only. If you have questions about your own financial goals please reach out to us or your financial professional.