A Brief Introduction to QDROs

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Pennsylvania and New Jersey-based attorney Carla Risoldi practices criminal defense and family law as a solo practitioner at Risoldi Law Offices, LLC. Possessing upwards of two decades of experience, Carla Risoldi provides personalized attention to clients seeking legal assistance related to such things as qualified domestic relations orders (QDROs).

During divorce proceedings, the two parties are expected to split up marital assets. This includes everything from property and income to retirement funds. These types of funds are governed by federal law, and cannot be divided without incurring hefty tax penalties if the proper procedure is not followed. Therefore, in the event of a divorce, the proper way to divide such a retirement asset is often by way of a Qualified Domestic Relations Order ("QDRO"). When done properly, the parties can effectuate the desired split of the marital retirement asset and avoid taxes and penalties..

QDROs are usually prepared during divorce proceedings and are separate court orders from the divorce decree. Once approved by the plan administrator, agreed to by the parties and issued by a court, they grant someone a right to a portion of a participant’s retirement benefits. Usually, this person, or alternate payee, is a former spouse and the amount received by that alternate-payee spouse can be a fixed amount or some agreed ratio, for example half of the benefits earned during the marriage. QDRO's most often are required for defined benefit pension plans and oftentimes a QDRO is not necessary to roll over a fixed sum from an IRA account, but the funds must be rolled into another IRA account to avoid the taxes and penalties. If and when the recipient spouse removes the funds from the IRA account, that is when they are taxes and possibly penalized, depending on the facts of their situation.