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 have your client 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 the client 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 dividing order), forward it to the attorney that hires us and submit the signed QDRO to the Plan for final approval. We are not a law firm and do not provide any legal services. Prior to 1/1/2023, QDROs were prepared by the Law Office of Philip D. Phillips. That legal practice has been closed and QDROs are now prepared by this corporation, with basically the same personnel. There should be no noticeable change in the preparation of QDROs or similar Orders to the attorneys that hire us. 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 use our standard default options, if possible, or contact the attorney for direction. If there is a dispute with your opposing party or opposing counsel as to the terms of the QDRO, you will have to resolve the dispute through the Court.
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.
If your client calls us for information, we can provide basic information but cannot provide legal advice. In that case, the client will be referred back to the attorney's office. It is important that the attorney remains active in the case, carefully reviewing the QDRO for content and typos. The attorney's office will also assist the party with getting the QDRO entered with the Court. Please do not simply refer your client to our office to handle the entire QDRO process. We only prepare the QDRO, we do not obtain signatures or enter with the Court.
Many plans require the completion of additional forms one the QDRO is accepted. We do not complete these forms or assist in the completion. We also do not prepare "freeze" letters, military SBP "deemed" letters, Petition to Enter or similar documents. We will forward the QDRO to the Plan Administrator for process, which averages about 90 days, although it can be longer. We can provide the Certified Mail tracking number for the QDRO that was forwarded to the Plan, however, your office or the party will be responsible for contacting the Plan Administrator to determine status.
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.
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 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 attorney 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. We also have sample Decree language available for your use on this web site.
Click on the button below for Sample Decree Language