Understanding QDROs and the Sterling Employee Savings Plan
When a couple divorces, retirement benefits often become one of the largest assets on the table. If you or your spouse participate in the Sterling Employee Savings Plan sponsored by Sterling corporation, you’ll likely need a Qualified Domestic Relations Order, more commonly known as a QDRO, to divide that asset legally and correctly.
Because this is a 401(k) plan, it comes with nuances such as pre-tax and Roth balances, employer contributions, vesting, and even loan balances that must be addressed clearly in your QDRO to avoid disputes or delays. This article explains what divorcing couples need to know about dividing the Sterling Employee Savings Plan the right way.
Plan-Specific Details for the Sterling Employee Savings Plan
Every QDRO must include key data about the retirement plan it covers. Here’s what we currently know about the Sterling Employee Savings Plan:
- Plan Name: Sterling Employee Savings Plan
- Plan Sponsor: Sterling corporation
- Sponsor Address: 27 STERLING ROAD
- Plan Dates: Operational since April 1, 1981; current plan year: 2024-01-01 to 2024-12-31
- Plan Number: Unknown (required for the QDRO – must be requested from the plan administrator)
- EIN: Unknown (also required – an experienced QDRO attorney will help track this down)
- Plan Type: 401(k) Plan
- Industry: General Business
- Organization Type: Business Entity
- Status: Active
- Participant and Asset Data: Unknown (you or your attorney will need current statements)
Because it’s a 401(k) plan within the general business sector, standard QDRO protocols apply, but with special emphasis on Roth contributions, loan balances, and employer match vesting rules—all of which must be spelled out in the order.
How a QDRO Works for a 401(k) Plan Like This One
A QDRO is a court order that allows a retirement plan to pay part of a participant’s benefits to an alternate payee—usually an ex-spouse—in accordance with divorce agreements and federal regulations. Without one, the plan administrator cannot legally split the account or distribute assets to anyone other than the participant.
Key Elements to Include in a Sterling Employee Savings Plan QDRO
1. Dividing Contributions
The Sterling Employee Savings Plan likely includes a combination of:
- Employee Salary Deferral Contributions (Pre-tax and/or Roth)
- Employer Matching Contributions
Your QDRO can specify whether the alternate payee receives a flat dollar amount, a percentage of the total account, or a percentage as of a certain cut-off date (such as the date of separation or divorce decree).
It’s critical to clarify whether both employee and employer contributions are divided. In most cases, employer contributions are subject to a vesting schedule, which brings us to the next point.
2. Vesting and Forfeited Benefits
Employer contributions in 401(k) plans like the Sterling Employee Savings Plan often follow a vesting schedule—meaning the participant earns rights to the contributions over time. If the participant has not met the service requirement, a portion of the employer match may be unvested and therefore not available to divide. A well-drafted QDRO must take this into account.
To prevent confusion, the QDRO should spell out whether the division applies only to the vested portion or to any increased vesting that occurs post-divorce. This helps prevent future disputes.
3. Addressing Outstanding Loan Balances
If the participant has taken out a loan from the Sterling Employee Savings Plan, this must be carefully addressed. There are generally two options:
- Assign division based on the net balance (account balance minus loan)
- Assign division based on the gross balance and place loan liability solely on the participant
The plan administrator will require clarity on how to account for the outstanding loan when computing the alternate payee’s share. If the QDRO is ambiguous on this point, the plan may reject the order outright.
4. Roth vs. Traditional Account Types
A modern 401(k) plan such as the Sterling Employee Savings Plan may contain both pre-tax and Roth accounts. This distinction matters, especially when one party might face different tax consequences post-transfer. Your QDRO must identify how these accounts will be divided. Options include:
- Splitting each sub-account proportionally
- Dividing only one account type (e.g., Roth only)
Any failure to address these distinctions can lead to unintended tax issues for either spouse. A well-prepared QDRO protects both parties from future surprises.
The QDRO Process for the Sterling Employee Savings Plan
Every plan has its own QDRO approval process, and the Sterling Employee Savings Plan is no different. While it’s sponsored by a private business entity—Sterling corporation—there may be third-party administrators involved. Here’s a general outline of what to expect:
- Step 1: Obtain the plan’s QDRO procedures, including required language
- Step 2: Draft the QDRO using exact plan data (plan name, EIN, plan number, etc.)
- Step 3: Submit the draft for preapproval, if offered by the plan administrator
- Step 4: File the QDRO in court with your divorce documents
- Step 5: Send the court-certified copy to the plan for implementation
At PeacockQDROs, we’ve completed thousands of QDROs from start to finish. That means we don’t just draft the order and leave you to figure out the rest. We handle the drafting, preapproval (if applicable), court filing, submission, and follow-up with the plan administrator. That’s what sets us apart from firms that only prepare the document and hand it off to you. Learn more about our QDRO services here.
Common QDRO Mistakes to Avoid
When dealing with a 401(k) like the Sterling Employee Savings Plan, small mistakes can cost thousands. Here are some to avoid:
- Failing to specify whether the division applies to Roth, traditional, or both types of contributions
- Omitting treatment of outstanding loan balances
- Assuming employer contributions are fully vested when they aren’t
- Not using the exact legal plan name: it must say “Sterling Employee Savings Plan”
- Submitting an order without required identifying details (like Plan Number or EIN)
You can read more about common pitfalls we frequently fix at this detailed article on QDRO mistakes.
How Long Will a QDRO Take?
The time it takes to finalize a QDRO depends on many factors—court processing speed, plan administrator review time, and whether you work with an experienced professional. You can learn about the five key factors that affect QDRO timelines in this guide.
Work with Experts Who Know What They’re Doing
We maintain near-perfect reviews and pride ourselves on a track record of doing things the right way. Our QDRO attorneys understand the complexity of dividing plans like the Sterling Employee Savings Plan and know exactly how to word the order for timely approval and accurate execution. Contact us today and we’ll walk you through everything, from data gathering to plan submission.
State-Specific QDRO Help
If your divorce was in California, New York, New Jersey, Connecticut, Kansas, Missouri, Iowa, or North Dakota, and you have questions about qualified domestic relations orders or dividing retirement assets like the Sterling Employee Savings Plan, contact PeacockQDROs. We specialize in QDROs and have successfully processed thousands of orders from start to finish.
Get the answers you need—explore our QDRO resources or reach out for personalized help if you’re in one of our service states.