What is a QDRO?
If you are going through the divorce process, or have a judgment in hand, you probably have heard the term “QDRO” tossed around, or even see it in the divorce agreement itself – “retirement account to be divided by QDRO.” But what does this mean in English?
A Qualified Domestic Relations Order (QDRO) – also known by a variety of terms depending on your state or plan, such as DRO, QILDRO, DBO, or simply a Division Order – is a court order that divides a retirement account pursuant to federal or state law. There are numerous state and federal laws that protect retirement accounts and pensions from creditors, so in order to bypass these protections, there is an exception for properly drafted QDROs pursuant to a divorce.
QDROs are often drafted with the cooperation of both parties and their attorneys. A QDRO does not typically convey any new rights – it merely takes what you’ve already agreed to (or what was ordered by a judge) in a divorce and puts it in a separate order that complies with state and federal laws.