If you have a retirement account, and you are or will at some point be divorced, you may become quite familiar with this acronym.
A QDRO is a court order that allows a third party aka alternate payee -- typically an ex-spouse -- to collect money from a retirement account. In Utah, a retirement account is marital property, so will almost always be divided upon divorce.
Because QDROs can be complicated, it's wise to consult an attorney experienced in dealing with them. Here is some basic information about QDROs:
What is a QDRO?
In Utah, a QDRO is a court-issued order that formally approves the division of a retirement plan. A QDRO must contain the following information:
- · The name and last known mailing address of the participant, and each alternate payee;
- · The name of each plan to which the order applies;
- · The amount or percentage to be paid to the alternate payee;
- · The number of payments, or time period, covered by the QDRO;
- · Other relevant information required by the Plan.
How Does a QDRO Work?
A QDRO explains how retirement assets will be divided between the plan participant and the alternate payee(s). A QDRO is required for any retirement plan covered by ERISA, the Employee Retirement Income Security Act.
Note: Remember, all retirement benefits earned during the marriage are subject to division. Just because a retirement plan is not covered by ERISA, does not mean that an ex-spouse is not entitled to a percentage of the retirement benefits. It just means that you will not do a QDRO to divide the plan benefits. Once a QDRO has been drafted the plan administrator will approve or deny the QDRO, based on a set of pre-established requirements. Once the QDRO has been approved the plan will typically start making payments or transfer the funds within 90 days. QDRO transfers of retirement benefits do not incur an early-withdrawal penalty.
How Are QDROs Drafted?
Plan administrators MAY provide forms that participants can fill out on their own. However, as there are a number of legal requirements involved in preparing a QDRO, it's probably best to speak with an attorney. That way you know that the QDRO prepared for you meets your specific needs.
Contact one of the experienced attorneys of Larreau & Lythgoe, PC to find out more about a QDRO or any other question you may have. Call us today at 801-393-5555.