A qualified domestic relations order (QDRO) allows retirement benefits to be transferred from one spouse to the other without triggering significant tax penalties.
This is particularly useful in high-asset divorces, where retirement assets accrued during the marriage are considered community property under Washington law. This means that during divorce, these assets must be divided fairly between the spouses.
Do you need a QDRO to divide your particular assets?
You will need to have a qualified domestic relations order to divide the following types of retirement plans, among others:
- 401(k) accounts
- Individual retirement accounts (IRAs)
- Military pensions
- Civil service pensions
- Labor union pensions
- Deferred compensation plans
- Profit sharing plans
- Defined benefit pension plans
- Tax-deferred annuities
What information should be included in the order?
According to the U.S. Department of Labor and ERISA law, a QDRO must contain specific information to be valid. Such information includes:
- The name and mailing address of the participant and the name and address of his or her ex-spouse
- How many payments should be made to the ex-spouse, or how long the order should last
- The name of the retirement plan affected by the QDRO
- How much of the retirement benefits (in either dollar amount or percentage) the ex-spouse should receive
Is it worth hiring a lawyer to prepare the order?
Yes, hiring a skilled attorney to prepare your QDRO is typically a wise investment. These orders are complex and must meet a variety of strict requirements to be enforceable.
A lawyer can also protect your financial interests to the fullest extent possible under the law. He or she can negotiate for your fair share of the retirement assets. If necessary, your lawyer can take the matter