For most people, our retirement plans (should we be so lucky to have them) are one of the most significant financial interests in our name – a fund to cushion your later years with some comfort, built up literally over the course of a lifetime.
Therefore, it’s no surprise that when a couple decides to divorce, plans about what to do with the money in retirement accounts, sometimes jointly owned and sometimes separately, are very complex, fraught, and have high stakes.
Especially in long-term relationships where potential decades of savings are on the line, it’s vital to be well-informed and fully prepared in a divorce to protect your and your loved one’s well-being. If you live in California, part of that preparation means being informed about QDROs.
What Is a Qualified Domestic Relations Order?
A Qualified Domestic Relations Order, or QDRO for short, is a legal document that officially sets out all the rules, contingencies, and expectations for dividing retirement funds between exes after a divorce.
A QDRO is necessary for one spouse to access the funds in another’s savings account – in fact, you cannot legally access those funds without such a document, regardless of any other agreements in place. It must be presided over and approved by a judge and approved and managed by a plan administrator, a neutral moderator to the involved parties. The ex-partner seeking access to funds is called the “plan participant.”
How Does It Work?
Essentially, a valid QDRO document establishes the legal right of one former spouse to access the retirement savings account. Once this right is established through the QDRO, the plan administrator can direct funds from the retirement fund straight into the plan participant’s account. This cuts out red tape, as the original plan owner no longer has to be personally involved in every transfer.
Both separating parties must determine the exact amounts used in splitting the retirement plan. The judge or plan administrator input may be necessary to reach a fair agreement.
How Do You Obtain a QDRO?
This brings us to our next topic: how exactly one gets a QDRO court order. Unfortunately, while it’s not necessarily a simple process, it’s undoubtedly doable by following the steps below:
Prepare Documentation
Unsurprisingly, preparing a QDRO requires careful documentation of the funds in the retirement plan, considering how long contributions have been going into the account, the frequency of deposits, and who is depositing funds.
Work with a trusted bank with experience in drafting QDROs, as you will need specific forms and paperwork formatted in a particular way.
Drafting The Details of The Document
Once all the pieces are assembled and preparation handled, the separating couple can sit down and determine how funds will be shared. Hopefully, this can be a relatively quick process if both parties can reach an agreement without too much friction. Otherwise, outside mediators may need to be paid and brought in to get a compromise.
Submit The QDRO for Approval
Once both exes have signed off on the agreement, it must be approved by the plan administrator (typically a representative of the financial institution overseeing the proceedings). The administrator may demand edits or revisions to the document, which cannot be negotiated, and may start the bargaining process over again.
Final Review And Approval
Once the plan administrator approves the document and the couple has officially signed off and agreed to it, it can be brought before a judge for final revision and approval. The judge will sign it themselves, making the QDRO official and legally binding.
Lastly, it is returned to the administrator at the financial institution, who can begin to administer payments.
Common Questions About QDROs
Is There A Deadline to File?
Officially, there is no limit to when you can file a QDRO. However, for best results, it’s typically in the interest of both parties to begin the process early and get it settled.
Who Is Responsible for Filing the QDRO?
Naturally, the responsibility lies with the plan participant, the ex seeking access to the retirement plan. They must do so to receive any benefits.
How Long Does It Take to Receive Funds?
This largely depends on the divorce process – if things are relatively amicable and communication is good, the whole thing can be done in weeks, with payments coming soon after.
On the other hand, fraught and contentious divorces can drag on for years as both parties scrum to get the best deal on everything, quickly delaying payment for a long time.
Can I File A QDRO By Myself?
While it is technically possible to file independently, given the high stakes and technical, complex regulations that must be followed, it’s a much smarter idea to work with a trusted attorney.
That’s where Azemika & Azemika comes in – we specialize in family law and protecting families. Contact us today for a consultation.
