What is a QDRO?

August 5, 2019 | 1 minute read
Posted by Andrew Homan on August 5, 2019

A Qualified Domestic Relations Order (QDRO) is an order that allows an administrator of a benefits plan (usually a 401(k) or a pension plan) to make a distribution to the divorced spouse of a plan pursuant to the terms of a divorce decree.

QDROs are at the intersection of federal law, Indiana law, the Employee Retirement Income Security Act (ERISA), and state family law. The passage of ERISA in 1974 ultimately led to certain requirements for employee benefit plans and their administrators including strict requirements on when payments could be made from a plan and to whom the payment could be made.

In order for plans to receive favorable tax treatment from the IRS, they must be considered "qualified plans." In order to be qualified, a plan must comply with laws and regulations under ERISA and as promulgated by the Department of Labor and the Internal Revenue Service.

Among these requirements is that payments from an employee benefit plan such as a 401(k) or a pension plan must be made according to the terms of a plan.

These rigid guidelines created a disconnect in cases of divorce when the spouse of a member of a plan was awarded a portion of a retirement benefit.

QDROs exist in concert with ERISA to provide a mechanism for Indiana judges to provide a court order that will allow a plan to make a distribution to a payee pursuant to the terms of a divorce decree without jeopardizing their qualified status.

Homan & Zentz, P.C. has extensive family law and ERISA experience to be able to guide you through QDROs and other matters related to your divorce.