Divorce and the Kendal-crosslands Communities 403(b) Plan: Understanding Your QDRO Options

The Kendal-crosslands Communities 403(b) Plan, like other 401(k)-type plans, usually consists of two contribution sources: employee deferrals and employer matching or discretionary contributions.

• Employee Contributions: These are typically 100% vested immediately and can be split without issue.
• Employer Contributions: These might be subject to a vesting schedule. If the employee spouse isn’t fully vested, part of the employer contributions could be forfeited at the time of divorce.

Your QDRO must specify whether it covers just the vested portion or includes future vesting. This decision should be based on negotiation or court direction.

Vesting schedules present a unique challenge in dividing retirement accounts. If your spouse is employed at the time of divorce but not fully vested in employer contributions, you’ll want to clarify in the QDRO whether the award includes unvested amounts that may become vested later.

The plan administrator of the Kendal-crosslands Communities 403(b) Plan will only make a payout based on what is vested at the time of actual division unless otherwise noted in the QDRO. Always request the latest vesting statement and have the plan’s vesting policy in hand when preparing the order.

If there’s a loan against the retirement account, the QDRO needs to address how to handle it. Loans reduce the total account value. You’ll need to decide whether:

• The alternate payee’s portion is calculated before or after subtracting the loan balance
• Loan repayment responsibilities are addressed in the divorce judgment

For instance, if the account has $60,000 in assets but an outstanding $20,000 loan, you could divide $60,000 (gross) or $40,000 (net). Your QDRO must clarify this figure—leaving it out could result in disputes or rejection by the plan administrator.

The Kendal-crosslands Communities 403(b) Plan may contain both traditional pre-tax amounts and Roth after-tax amounts. This matters. If you divide a Roth account and transfer that to a traditional 401(k), the funds may lose their tax-free status—or cause problems for the alternate payee.

Your QDRO should address Roth and traditional assets separately. Specify whether you want a proportional split of both types or a clear division of each source to maintain tax consistency. This is one of the most common errors we see in poorly drafted QDROs.

You must contact the plan administrator of the Kendal-crosslands Communities 403(b) Plan and request a copy of the QDRO procedures and a sample QDRO. These documents tell you exactly what the plan requires before accepting an order. Every plan has its own standards—ignoring them results in rejection.

It’s critical to use language that the administrator of the Kendal-crosslands Communities 403(b) Plan will approve. This means clearly stating the plan name, addressing contributions, loans, vesting, and Roth breakdowns. We recommend working with a QDRO professional rather than taking a one-size-fits-all template approach. No two plans are alike.

Once the QDRO is drafted, it must be signed by a judge in your court case. This makes it an official domestic relations order. That signed copy must then be submitted to the plan administrator for review and approval.

The plan administrator will review your QDRO and either approve it or request revisions. Once approved, the alternate payee will receive their portion of the Kendal-crosslands Communities 403(b) Plan assets either by rollover into another retirement account or another form of transfer. Timing depends on how efficiently the plan processes QDROs, which can vary significantly.

For more information on how long a QDRO process can take and what can affect that timeline, visit our guide here: QDRO Timing Factors.