What is a Qualified Domestic Relations Order (QDRO) in a divorce?

A qualified domestic relations order (hereinafter, "QDRO"), is a document used to divide retirement accounts.

This is a court order that the Judge will sign directing the plan administrator of the husband or wife's pension or 401(k) to distribute a portion of those funds to the other spouse.  (In Montana, how much the portion being distributed will be depends on a number of factors you should discuss with your lawyer.)

Retirement benefits that are accumulated during a marriage are considered to be marital property.  Generally, retirement benefits that are accrued before the date of marriage will be considered non-marital property, which will not be divided between spouses during a divorce.

This allows the funds to be transferred to the other spouse without incurring a penalty or tax payment.

The receiving spouse will ultimately receive his or her own separate account.  If the participant spouse has a traditional pension, the plan administrator will need to establish a separate pension benefit for the receiving spouse. If the participant spouse has a retirement savings in a 401(k) plan, a portion of the plan funds will be rolled over to the receiving spouse, with no tax and no penalty.

Your lawyer will draft the QDRO for you, and the plan administrator for your retirement plan will review it.

Some benefits are not able to be distributed between divorcing spouses, including social security benefits.