Retirement and pension funds/plans are one of the many assets that can be split between spouses as part of a property division in a divorce. A qualified domestic relations order (QDRO), is entered during the divorce, which recognizes that there is joint marital ownership interests in the plan, specifically the spouse that isn’t the primary benefactor.
This recognition awards a part of the plan’s benefits to another recipient, who must either be a spouse, current or former, a child or another named dependent of the plan. Moreover, a QDRO can also be entered for spousal or child support.
The only employee benefit or pension plans that are subject to the Employee Retirement Income Security Act (ERISA) can be applied for via a QDRO. This allows QDRO’s to be acceptable as marital or community property division between the plan recipient and the chosen alternate recipient (listed above), as well as payment of alimony or child support.
Before it becomes qualified, a domestic relations order is simply any judgment, decree or order that relates to any provision of child support or alimony, OR marital property that a spouse, current or past, as well as children or other dependents, have a right to. It is made in accordance with a State domestic relations law, such as community property law.
The actual purpose of the QDRO is to recognize someone else’s right to receive any portion of a benefit plan and to ensure that if necessary, they receive part of that pension.
In order for the domestic relations order to become qualified by a plan administrator, the plan administrator must first determine that the order meets the rules for segregation specified by the plan.