• 401(k), 403(b), and 457 plans.
• Thrift plans.
• Profit-sharing plans.
• Money purchase plans.
• Employee stock ownership plans.
• Tax-sheltered annuities.
• Defined benefit or pension plans.

A QDRO is the specific court order required of the company or plan administrator to divide an employer-sponsored retirement benefit as a non-taxable event incident to divorce. If you were awarded or ordered to pay a portion of an employer-sponsored retirement benefit to a spouse, former spouse, or dependent, a QDRO is required to secure the order of the court and the provisions of the Marital Settlement Agreement, Decree, or Judgment of Divorce.

Information gathering:

• Plan discovery
• Draft proposed QDRO
• Work directly with plan administrators
• Regular follow-up and communication during process
• Obtain written pre-approval from plan administrators
• Draft final QDRO that is suitable for signatures and court filing
• Provide court and plan filing instructions
• Serve on the Plan Administrator

See our QDRO Procedures for more information.

State / Local Government Plan:

• Military Retired Pay
• Federal Service Retirement System (FERS)
• Civil Service Retirement System (CSRS)
• Railroad Retirement
• Individual Retirement Account (IRA)
• Individual Investment / Brokerage Account
• Joint Investment / Brokerage Account
• Non-Qualified Account

Yes. A QDRO can be prepared, and a proposed draft can be served on plan administrators for formal review prior to filing the QDRO with the court. It is suggested that a draft or unsigned copy be served on plan administrators for pre-approval and review prior to filing the QDRO with the court. The review and pre-approval by plan administrators can generally take 30-60 days.

Smarter Divorce Solutions has established a flat fee cost structure depending on the type of retirement plan to be divided. Most companies or third-party administrators also charge an additional QDRO processing fee to divide defined contribution plans or 401(k) accounts, which must be disclosed upfront in the plan’s Summary Plan Description (SPD). This fee is generally a few hundred dollars and can be allocated to the Participant, Alternate Payee, or split between the two parties within the QDRO using the QDRO proceeds. Additional plan fees do not apply to the division of a defined benefit or pension plan.

Please see our Fee Schedule for more information.

The time frame for completing the QDRO process once payment has been made for services is typically between 30-120 days, but it can vary. Unique agreements, unique plan terms and procedures, or a lack of cooperation can delay the general timeline.

Orders drafted by Smarter Divorce Solutions are generally prepared for review within 10 business days of receipt of payment. Our office regularly follows up with each party and the plan administrators to ensure the QDRO process is moving forward as efficiently as possible.

Yes, a domestic relations order requiring a portion of a participant’s annuity benefit payments be paid to an alternate payee does not fail to be a QDRO solely because the domestic relations order was issued after the annuity starting date. A Shared Interest QDRO is required.

Reference: see section 1001 of the Pension Protection Act of 2006, Pub. L. 109-280, 120 Stat. 780 (Aug. 17, 2006).

No. The QDRO is drafted specifically to execute a non-taxable transfer from the Participant’s account to an account that must be established in the name of the Alternate Payee. The division of the account pursuant to a QDRO is a non-taxable event to both parties.

As mentioned, the QDRO itself does not create a taxable event, but any subsequent distribution from either account will. Tax liability is created when funds are distributed (a rollover is a non-taxable event) from the account(s), and the distributions are treated like ordinary income.

Please be aware, pursuant to IRC Section 72(t), an Alternate Payee is subject to any federal and state tax liability as a result of a distribution from the plan. However, pursuant to a properly drafted QDRO, an Alternate Payee is exempt from the 10% federal early withdrawal penalty if distributing funds from the Alternate Payee account prior to age 59 and 1/2.

A state authority, generally a court, must actually issue a judgment, order, or decree or otherwise formally approve a property settlement agreement before it can be a “domestic relations order” under ERISA. The mere fact that a property settlement is agreed to and signed by the parties will not, in and of itself, cause the agreement to be a domestic relations order. There is no requirement that both parties to a marital proceeding sign or otherwise endorse or approve an order. It is also not necessary that the retirement plan be brought into state court or made a party to a domestic relations proceeding.

Reference: ERISA §§ 206(d)(3)(B)(ii), 514(a), 514(b)(7); IRC § 414(p)(1)(B)