Splitting Retirement Benefits: Your Guide to QDROs for the Zaxby’s Retirement & Savings 401(k) Plan

One of the most important distinctions in a divorce is separating what part of the account is the participant’s contribution versus what portion was contributed by the employer—Peachy poultry, Inc… In many cases, only a portion of the employer match may be vested, depending on the plan’s vesting schedule. Unvested employer contributions typically revert to the plan and are not subject to division.

Vesting refers to how long an employee must work before they own the employer-contributed portion of their retirement account. For example, if the Zaxby’s Retirement & Savings 401(k) Plan uses a 5-year graded vesting schedule, an employee may only be partially vested after a few years. When drafting your QDRO, it’s critical to know the participant’s vesting status to avoid trying to divide funds that the employee does not yet own.

If the participant has taken out a loan from their 401(k), the balance of that loan reduces the distributable value available for division. It’s not uncommon for clients to forget to address loan balances, but failing to do so can create major obstacles down the road. Your QDRO can either:

• Divide the account balance net of the loan (what’s actually left in the account), or
• Divide the gross balance including the loan and account for that separately

Either way, the plan will not transfer parts of a loan balance to the alternate payee—they only divide actual funds remaining within the account.

Some 401(k) plans, including those like the Zaxby’s Retirement & Savings 401(k) Plan, may include both traditional pre-tax contributions and Roth after-tax contributions. These two account types have different tax implications:

• Traditional 401(k): Taxes are due when money is withdrawn
• Roth 401(k): Taxes were already paid; withdrawals are generally tax-free

It’s essential to allocate Roth vs. traditional funds appropriately in the QDRO to match each party’s expected tax treatment. If you ignore this distinction, it could cause tax confusion and unfair settlements.

Obtain a copy of the Summary Plan Description (SPD), plan documents, and contact the plan administrator through Peachy poultry, Inc.. You’ll need to confirm the EIN and Plan Number, especially since those are currently unknown. These are necessary to draft a valid QDRO.

You and your spouse (or through your attorneys) will agree on how to split the 401(k). This could include:

• A percentage of the account balance as of a specific date
• A fixed dollar amount
• Different treatment for pre-tax vs. Roth subaccounts

It’s also important to decide which party will pay any QDRO processing fees charged by the plan.

This is not something you want to DIY. QDROs must follow extremely detailed formatting requirements specific to the Zaxby’s Retirement & Savings 401(k) Plan. At PeacockQDROs, we specialize in tailoring each QDRO to the employer’s administrative procedures. That way, your order won’t be rejected or delayed due to common mistakes.

We don’t just stop at preparing the document—we also handle any preapproval process (if the plan allows it), help submit it to the court, and follow up until the administrator processes it.Avoid these common QDRO mistakes by letting our experienced team handle the process from start to finish.

Once the order is finalized and signed by both parties or the family court, it must be filed with the court and then submitted to the plan administrator for review. Plans like the Zaxby’s Retirement & Savings 401(k) Plan will reject incomplete or incorrectly worded QDROs—something we’ve seen too often from people who go it alone or use DIY software.

After the plan administrator accepts the QDRO, assets can be moved to the alternate payee’s account—usually a rollover IRA or similar retirement account. Timing can vary, and some plans take longer than others.Here are five factors that affect how long QDROs take.