Learn how these court-issued judgments can hurt or help you
While you're going through a divorce, it's not the best time to have unknown acronyms being thrown your way. It's one of the most emotional times in your life, so it's best to be prepared for anything that could affect your life after marriage. That's why I'd like to talk about the Qualified Domestic Relations Order, or QDRO.
The QDRO is a court-issued judgment that specifically targets retirement accounts. Basically, it makes your 401K, 403B or any other type of post-employment fund up for grabs during a divorce hearing. This "property-settlement agreement" can be used to settle child support discrepancies, or alimony payments. In some states, it's considered community property, so it will cut your payments automatically in half. It will legally allow someone other than the primary source of the account's funder collect when it's time to pay out. However, according to the law, there are limits to who can collect—alternate payees can't be anyone other than a spouse, former spouse, child, or other dependent of a participant.
While a "state authority" i.e., a court, needs to sign off on a QDRO, plenty of the paperwork can be drafted without the court's oversight. Ideally a lawyer such as myself is involved, but the main points that need to be entered into the document include the following:
-The name and last known mailing address of the participant and each alternate payee
-The name of each plan to which the order applies
-The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee
-The number of payments or time period to which the order applies
If you believe that a Qualified Domestic Relations Order can help your case, please feel free to call me at (818) 649-7559 to further discuss drafting a QDRO and your case.