Photo of Professionals at Weinberg, Kaplan & Smith, P.A.
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What is a QDRO?

by | Apr 6, 2018 | Property Division

Even if they have heard the acronym “QDRO” before, many Marlton, New Jersey, residents may not be familiar with the term.

QDRO is short for “qualified domestic relations order.” Unlike a divorce decree or other order entered in a family law case, a QDRO is directed to the manager of a party’s retirement account. In this sense, it works more like a wage garnishment.

Also, and again like a wage garnishment, the QDRO tells the manager of the retirement account to set aside or pay a portion of the account to the account holder’s former spouse. The QDRO also specifies under what terms this portion is to be set aside; these terms are supposed to be consistent with the parties’ divorce settlement or the judge’s final divorce decree.

A QDRO is common either in the course of or after a New Jersey divorce when one of the parties has retirement accounts that are marital property. It is an important component to ensuring a fair property division since it is one of the few legal means by which someone can access retirement funds without incurring a tax penalty.

Properly completing a QDRO can actually be tricky. Oftentimes, each bank or retirement fund will have its own set of rules or even forms it will apply when it comes to processing a QDRO, and the company could well refuse to honor a QDRO that is not completed according to these rules. Moreover, making a mistake on a QDRO could mean that a party gets either too much, or not enough, of the other party’s retirement account to truly constitute a fair distribution of marital property. A poorly written QDRO may also prompt questions from taxing authorities.

Getting a QDRO submitted and accepted by the manager of a retirement account can be a tricky business. For tasks ranging from making sure the divorce decree is correct and sufficiently clear to ensuring the QDRO itself matches the decree and is in the proper format, it is often advisable to have the help of an experienced family law attorney.