A Qualified Domestic Relations Order (QDRO) is a court order used to assign all or part of a Participant’s interest in a retirement, pension, savings, 401k or similar deferred compensation plan of a current or former employer. Usually such assignment, or division, of these retirement plans is done in connection with a division of property in a divorce case, although it can also result from spousal support or child support.
Military retirement, CSRS, FERS and the federal Thrift Savings Plan will not accept a QDRO. Instead, these plans require a division order (Division Order for military, Court Order Acceptable for Processing (COAP) for FERS and CSRS and Retirement Benefits Court Order (RBCO) for TSP), which is very similar to a QDRO and is a separate Order from the Decree. A division order must have language specific to the plan and although it may be contained within the Decree, the preferred method is to use a separate order, as with a QDRO.
Some employers have non-qualified plans and stock option plans. The vast majority of these employers will not accept a DRO, QDRO or other division order and will not transfer a portion to a spouse upon divorce. Please contact the employer to determine if it will accept a DRO, QDRO or other division order.
IRAs usually do not require a QDRO, however, the only way to know is for you to contact the financial institution and inquire. I can confirm that Fidelity, Charles Schwab and Vanguard do not accept QDROs or DROs in order to divide an IRA. Other financial institutions may require a copy of the Decree or Letter of Instruction instead. Be aware that many attorney enter a QDRO for IRAs even though not required by the financial institution because of a concern with avoiding the 10% penalty associated with an early withdrawal. The tax regulations state that the penalty does not apply when a QDRO is entered, so many CPAs advise that a QDRO be used to be safe, even if it is never sent to the financial institution.
For a flat fee of $400 per QDRO (or other division order), we will prepare a QDRO (or other division order) and forward it to the party that hires us. for entry with the Court. Once you obtain the Judge's signature, you must purchase a certified copy from the Court Clerk and send it to the Plan Administrator for processing. We will provide you with a sample cover letter to the Plan and the best information we have as to where you will send the QDRO. We are not a law firm, do not provide any legal services and do not represent either party. We will do our best to follow the letter and intent of the Decree of Divorce, relying upon the information supplied. In the event that some vital terms are omitted from the Decree of Divorce, we will advise the party that hired us and request the option he or she wants us to use. If a dispute arises between the parties on the wording or options of the QDRO, the dispute can be mediated or presented to the Judge for a decision. Getting the issue in front of the Judge usually requires the parties hiring attorneys.
Unless the Participant is retired and receiving monthly benefit payments, or the Decree directs otherwise, we prepare all defined benefit QDROs using a "separate interest" approach. Some government plans (FERS, TRS, TMRS, etc.) don't allow a "separate interest" approach.
Many counties now require the filing of a Petition to Enter QDRO, pursuant to Section 9.101, Texas Family Code, and payment of a filing fee if the QDRO is signed more than 30 days after the Decree of Divorce was signed. The party is responsible for preparation of the Petition and payment of the fee as this is not included in our preparation fee.
Many Plans now charge a fee to review a QDRO, ranging from $250 to $1,200. Any such fees charged by a Plan are not included in our preparation fee and must be handled separately by one or more of the parties. Usually, the Plan's review fee will be taken by the Plan from one or more of the parties' account balance (for defined contribution plans). Some Plans have set rules for the party that is responsible for the review fee and that can't be changed.
We offer a reasonably quick turnaround time for the initial preparation of the QDRO, usually 2-3 business days, unless we have to obtain a model QDRO from the Plan Administrator. We cannot control how long it may take a Plan to review an Order. The parties should understand that this is not a fast process; that it usually takes 2 - 3 months. We urge the parties to monitor the Plan's review process, since the Plan sometimes does not let us know when the order is approved. In the event a problem arises with the Plan as to the wording of a QDRO, or the manner in which the benefit was divided, we will advise the parties immediately.
We are not able to monitor or check status with a Plan Administrator, other than confirm that USPS delivered the QDRO. The parties can contact the Plan Administrator to determine the status of the QDRO processing, however, most Plans will only provide information to the Plan Participant.
We do not get involved in disputes with Plan Administrators over processing of the QDRO or calculations of the awards. The disputing party should file an appeal with the Plan to have the case reconsidered. Any further action would require the assistance of an attorney that specializes in ERISA.
The Fact Sheets required for requesting a QDRO preparation from us is available below. Please use the "QDRO Fact Sheet - Pro Se DB" for a defined benefit plan (traditional pension or cash balance plan) and the "QDRO Fact Sheet - Pro Se DC" for a defined contribution plan (401k, 403b, 457b, TSP, IRA, etc).