QDRO stands for Qualified Domestic Relations Order. Basically, it is a court order directing a plan administrator to divide the benefits in a deferred compensation plan such as a 401(k) plan, stock options or pension.
Why do I need a QDRO?
California is a community property state. Generally speaking, each spouse owns one-half of all property acquired by either spouse during the marriage. This can include benefits earned by one spouse through an employer-sponsored plan, such as pensions, retirement plans, 401(k) plans, stock options and more. As community property, a divorcing spouse may be entitled to one-half of those benefits. However, many of these types of plans are heavily regulated by the government, and they may have rules in place which would not allow the employee-spouse to assign or transfer his or her interest in the plan to another party, including his or her spouse.
The QDRO was created as a way to recognize the right of a spouse to share in the other spouse's benefit plan. A QDRO is a court order which directs the administrator of a benefits plan to divide the interest in a deferred compensation account between the employee and spouse.
When do I need a QDRO?
If one of the spouses in a divorce is asking the court to divide either a Defined Benefit Plan or a Defined Contribution Plan, then a QDRO will likely be required. A pension or retirement plan is an example of a Defined Benefit Plan, while a Defined Contribution Plan is something like a profit sharing plan or 401(k).
Helping Family Law Attorneys and Clients Throughout California with QDROs
Suzanne Hunsinger has over 30 years of experience helping divorcing couples and family law attorneys understand the complicated issues surrounding the property division in their divorce. Ms. Hunsinger drafts Qualified Domestic Relations Orders when required as part of the property settlement under California community property law. For advice and assistance with your divorce or related matter, contact the Law Office of Suzanne Hunsinger. We are located in San Jose but serve clients throughout northern California and state wide.