Splitting Retirement Benefits: Your Guide to QDROs for the Merendino Contracting, Inc.. Retirement Plan

The total account in a 401(k) plan like the Merendino Contracting, Inc.. Retirement Plan typically includes both employee deferrals and employer contributions. In a QDRO, each type of contribution needs to be accounted for separately, especially if the marital period covers only part of the participant’s employment.

If the employer made matching or discretionary contributions, your QDRO should address whether your share will include just the employee’s deferrals or also the employer contributions earned during the marriage.

Many 401(k) plans have vesting schedules for employer contributions. For example, the employer match might vest over five years. If the plan participant isn’t fully vested at the time of divorce or distribution, a portion of those funds may not be payable to the alternate payee (the spouse receiving a share).

A QDRO must take vesting into account. An experienced QDRO attorney will include language to properly handle unvested amounts—either excluding them outright or stating they’ll be distributed later if the participant becomes vested in them.

If the plan participant has taken a loan against their 401(k), that loan reduces the account balance. The QDRO can handle this in multiple ways:

• It can divide the net balance after subtracting the loan
• It can treat the loan balance as a marital asset or liability
• It can specifically allocate the loan to the participant

This is an area where QDROs can go wrong. If the document is silent on loans, the division may come out very differently than either party expects.

Some 401(k) plans—including the Merendino Contracting, Inc.. Retirement Plan—may offer both traditional (pre-tax) and Roth (after-tax) contribution options. These have different tax treatments and should be kept distinct in your QDRO.

The QDRO should clarify whether the division applies proportionally to each account type, or whether certain funds (like Roth only) are being awarded. Without this clarification, the plan may interpret the order differently than either party intended.

Even though the plan number and EIN aren’t publicly available, you’ll need them when submitting the QDRO. We gather this information directly from the plan administrator when necessary to avoid delays in processing.

Some plan administrators allow you to submit a draft QDRO for review before getting it signed by the court. This can catch errors early and make final distribution faster. While we handle all stages of the QDRO process, preapproval is especially helpful with plans like this one, where some specifics aren’t readily accessible.

Vague terms like “50% of the account” are prone to misinterpretation unless they specify:

• 50% of what? The marital portion? The total balance as of a set date?
• Are gains and losses included?
• Is the account being split into two, or will payment be made via transfer or future distribution?

Every word in a QDRO matters, so clarity is key, especially with plans that might have internal policies not published online.