QDROs and DROs: A Court Order to Divide Retirement Accounts in Your Divorce

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Some of the most important assets many individuals have are ones that they never see, at least not until leaving the workforce: retirement accounts. Most of us experience the presence of our retirement funds on the day-to-day level as an ‘absence’: the deduction of some percentage of our paycheck.

During the process of divorce, retirement funds require special attention. Not only must they be valuated and factored into the division of assets between soon-to-be former spouses, but they require the filing of additional paperwork before a fund administrator can release funds in accordance with a court-approved division of marital assets. Enter QDROs, DROs, and a whole alphabet soup of equivalent documents.

Federal Law Says a Separation Agreement Is Not Enough

While state law governs marriage and divorce, federal law governs pension funds. A state court can issue a divorce decree (or separation agreement) and order that marital assets, including the value of retirement accounts, be split between the former partners in a particular way. However, while a separation agreement can spell out the division of assets held in retirement accounts, it cannot compel the release of those funds from those accounts because federal law governs the management and administration of those accounts. Forwarding a separation agreement to a retirement fund administrator does not give the administrator the authority to release the funds.

QDROs, DROs, and Other Equivalent Documents

In order to release funds from a federally regulated retirement fund with a third-party administrator, a state court will need to issue a special order designed to bridge state and federal law. Commonly this court order is known as a Domestic Relations Order (DRO) or Qualified Domestic Relations Order (QDRO).

There are a variety of other equivalent documents, many of which are tailored to the particular requirements of a fund type. For example, federal pension accounts administered through the Federal Employee Retirement System (FERS) and Civil Service Retirement System (CSRS) cannot be divided by a QDRO but instead require a Court Order Acceptable for Processing (COAP). The Massachusetts Teachers Retirement System (MTRS) also has specific requirements.

The fund types which require QDROs include:

  • 401Ks
  • 403Bs
  • 457s

As Individual Retirement Accounts (IRAs) are administered by the person who owns the fund, they generally do not require a QDRO or similar document to be divided.

The QDRO Process

While it takes only a few days, generally, to draft a QDRO, the whole process can take up to six months or longer. There may be a pre-approval process available through the fund administrator to ensure that the wording of a QDRO complies with their requirements before it is signed by a court. After being signed by a judge, the signed and certified QDRO must then be forwarded on to the retirement plan administrator.

Skilled Family Law Attorneys Here to Assist Your Retirement Asset Division

The QDRO process can seem daunting, but skilled family law attorneys like ours can guide you and reduce the stress associated with retirement fund asset division. We provide guidance and representation for clients undergoing divorces with complex asset division.

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