What Is a QDRO?

calculating money

A QDRO, or qualified domestic relations order, is a legal document used in instances of divorce. Generally, it is used to award a portion of a spouse’s retirement plan. Unlike other martial assets,  diving up the funds in a retirement plan is a complex and confusing process. It is best to speak with divorce attorneys in Nassau County to understand how to navigate the QDRO form.

Why Is a QDRO Necessary?

If you and your spouse contributed to a retirement account such as a 401k, a QDRO is essential to ensuring you receive the money you are entitled to during a divorce. Not only is it necessary to obtain the correct funds, but any time you transfer retirement funds, it must comply with Federal Law.

Any account protected under the Employee Retirement Income Security Act is subject to a QDRO. Accounts like Individual Retirement Accounts (IRAs) are not subject to QDRO and are treated and distributed like any other martial asset during a divorce.

A primary benefit of a QDRO is that the money taken out is not taxed when put into the alternate payee’s retirement account. However, if the money is not placed in an account under the ERISA, the funds are subject to taxation.

How Is the Money Divided in New York?

Some states operate on community property, which splits all marital assets evenly during a divorce. However, New York is an equitable distribution state, which allows wealth and property distribution based on the individual circumstances of each spouse.

When dividing the money in a 401k, New York does consider this marital property, so it does not have to be divided evenly between spouses. However, a 50% split is extremely common.

It’s also essential to know that only funds accrued during the marriage are considered marital property. This means any funds the participating spouse obtained before getting married are not part of the money the alternate payee is entitled to receive.

How Do I Obtain One?

Generally, a QDRO is drafted by the spouses and their attorneys before it is submitted to a judge for approval. Once a judge has signed off on the document, the non-participating spouse will send it to the administrator of the retirement plan. These entities have specific processes for handling this document, so it could take up to a year and a half before the QDRO is approved.

Though it can be done, trying to draft a QDRO on your own can lead to delays in approval, as one mistake or oversight can cause a halt in the process of your divorce.

If you’re getting a divorce, ensuring you have a competent divorce attorney on your side is essential to making sure your QDRO is filed correctly. Don’t wait until it’s too late to reach out to Barrows Levy, PLLC for help navigating your divorce.

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