What Is a QDRO?

If you’re considering a divorce, you may feel a bit overwhelmed by some of the legal terminology you encounter. The more you read, the more questions you have. Familiarizing yourself with basic law terms can help ease your stress and anxiety. QDROs, which divide retirement assets, can be an intimidating topic, but it’s very important to understand what these complex documents do.

In Nebraska, as in many other states, courts use qualified domestic relations orders (QDRO) to divide a divorcing couple’s retirement assets. Frequently pronounced “que-dro” or “qua-dro”, these orders allow a spouse to appoint an alternate payee (rather than himself or herself) to receive the benefits under his or her retirement plan. In many cases, one spouse names the other spouse as alternate payee as part of the divorce settlement. It’s also possible for the QDRO to address both spouses’ retirement plans and specify who gets what.

Requirements for QDROs

In Nebraska, a QDRO must satisfy several requirements to obtain approval from the court and the retirement company’s plan administrator. If the plan administrator rejects the QDRO, it must be revised until all information and formatting is accurate.

In general, a QDRO must list the names and addresses of both the plan participant and the alternate payee. It must also describe how and when the benefits will be distributed. How much money will the alternate payee receive? Will the money be awarded in payments? A lump sum? These are all questions the QDRO must answer.

Furthermore, the QDRO must address any tax consequences. The language concerning taxes must be handled with care, as a poorly-drafted QDRO can leave one or both spouses with significant tax liability.

For many people, retirement assets represent a significant part of their overall wealth. Because these documents can have a serious impact on finances and taxes, it’s important to work with an experienced family law lawyer who understands QDROs and how to handle these complex matters.

Nebraska Family Law Lawyers

At Kinney Law, we help people in a broad range of family law cases. Call the family law attorneys at Kinney Law today at (402) 905-2220 to discuss your needs and goals.

This website has been prepared by Kinney Law, P.C., L.L.O. for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.