What is a qualified domestic relations order (QDRO)?

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A Qualified Domestic Relations Order (QDRO) is a legal mechanism that empowers a state judge overseeing a divorce proceeding to authorize the distribution of federal retirement benefits. This can include pensions, 401(k) accounts, and individual retirement accounts (IRAs), that would typically be protected from legal action and not accessible to third-party recipients due to strict regulations. Not only can a QDRO facilitate the allocation of such benefits, but it can also be utilized to enforce the payment of overdue spousal maintenance or child support.

Why is a QDRO necessary?

Colorado follows an equitable distribution model when it comes to asset division. Apart from children, the biggest point of contention leading up to a divorce and during a divorce is money. A Qualified Domestic Relations Order 

Assets like retirement accounts (401(k) and IRA) are stringently regulated by federal law. To actually divide these assets, not just negotiate their division, a QDRO is necessary. A QDRO does not only authorize the transfer of assets. It can also define the tax consequences of these assets. Usually, this means both spouses will share the debt and tax burden.

Why is an attorney necessary for a QDRO?

A judge will not create a QDRO, even if they approved the split in assets. A QDRO should be done with the guidance of an experienced family law attorney. Crafting a QDRO must be done with utmost care as it must conform to both the plan’s stipulations and the specific provisions outlined in the Colorado divorce decree. 

The language used in the QDRO must satisfy the requirements stated in the plan’s terms. This language could change depending on the type of retirement plan (for example the types of IRAs).

After the QDRO is carefully created, the family court then issues it, setting forth the specifics on how the account should be divided. This process is critical in ensuring that the division of assets is fair and equitable for both parties involved in the divorce.

Don’t use ‘canned’ QDROs

The intersection between divorce, family law, and your finances can be very complex. Using ‘boilerplate’ or standard forms for these orders can cause you more headaches than save you time. We always recommend you contact a qualified professional, like a family law lawyer, to help you save time, money, and headaches down the road. Our firm has experienced connections to legal professionals to who can create a QDRO. 

If you’re looking for a divorce attorney, preparing for divorce, or have questions about how the divorce will affect your 401(k) and other property. Having a trusted professional on your side during this time could mean the difference between giving away your retirement savings and keeping your nest egg safe.

The Drake Law Firm is a family law firm with offices in Golden, Colorado, and we’re here to help you protect your financial interests and get through your divorce with as little stress as possible.

To schedule your consultation with an experienced divorce lawyer, call (303) 261-8111 today or fill out our online form here. For your convenience, we can consult over the phone or Zoom. We also offer Saturday consults by appointment.

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