A QDRO is the abbreviation for a “Qualified Domestic Relations Order.” The QDRO is part of the property division orders contained with a Columbus Ohio divorce or dissolution settlement. A QDRO relates to the retirement account or pension fund which as a marital asset may be divided between the spouses in some way in the context of the parties’ overall division of their marital property. Retirement accounts are managed and held by a separate legal entity, will require a well-crafted QDRO, directed to the Plan Administrator, in order to complete the division of a retirement account or pension fund. A QDRO is an order by the Judge or Magistrate in a Columbus or Central Ohio divorce or dissolution.
Often (but not always), the Plan itself has its own QDRO “form” and requires specific compliance to many factors before the QDRO orders can be accepted and acted upon. Each case is unique, and it is important to work with an experienced attorney in order to ensure that your QDRO(s) are properly prepared and executed.
Many clients are surprised or even shocked to learn that their 401(k) or public retirement accounts are considered a “marital asset” and as such are subject to equal or equitable distribution during a divorce or dissolution. The amounts contributed to the account, as well as the appreciation of existing assets must be taken into account during property division calculations.
We have extensive experience working with QDROs for private plans and DOPOs or “Division of Property Orders” required by public plans such as the State Teachers Retirement System (STRS) or the Public Employees Retirement System (PERS). We work with an experienced CPA to ensure proper inclusion and valuations of all marital assets and to assess tax implications associated with any overall division of the marital assets as some assets (if they are pre-tax, tax deferred compensation or retirement assets) may need to be tax adjusted so that all assets (pre-tax and post-tax) may be viewed on an after tax basis. And, unless pre-tax, tax deferred assets or retirement assets are going to be divided separately or as a category, assets need to be “tax adjusted.”
Many individuals commencing the divorce process fear that potential distribution of retirement assets to a spouse may trigger taxable income in the year in which the marriage is terminated. Taxable income is rarely triggered, because there are alternative strategies to dividing retirement accounts (whether 401(k) or other pre-tax interests) without triggering the taxable income simply due to the retirement account distribution.