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What is a QDRO in a California divorce case?

On Behalf of | Jul 30, 2020 | High-net Worth Property Division |

You and your soon-to-be ex-spouse likely have considerable marital assets, including your home, cars, checking accounts and belongings. During your divorce, you should receive an equal share of these assets. You should not forget about retirement accounts, though.

A qualified domestic relations order is a court order that divides the funds in your retirement account or accounts. Judges in California typically issue QDROs as part of the final divorce decree. Consequently, if you are planning to end your marriage, you should know a few things about these orders.

What does a QDRO do?

An official court order, a QDRO tells the administrator of your retirement plan what to do with the funds. For example, the QDRO may direct you to receive funds as part of the property distribution process.

Likewise, if your ex-spouse must pay spousal or child support, the QDRO may provide for taking funds from the retirement account.

Is a QDRO always necessary?

You probably do not need a QDRO for all your retirement plans. If you have a military pension, an individual retirement plan or a deferred annuity, a QDRO may not be a necessary part of your divorce decree.

On the other hand, if you and your spouse have any of the following, you likely need a QDRO:

  • 401(k) plans
  • Corporate pensions
  • Company defined benefits
  • Profit-sharing retirement plans
  • Tax-sheltered annuities
  • Other similar plans

How do you receive retirement funds?

QDROs tend to be flexible. If a judge issues such an order as part of your divorce, you may receive funds in a single or lump-sum payment. Alternatively, you may be able to opt for monthly or other periodic payments.

When you are planning your divorce, you should think about how you want to receive retirement funds. Nevertheless, by understanding when to seek a QDRO, you boost your chances of receiving an equal share of the assets in your marital retirement accounts.