A Qualified Domestic Relations Order (QDRO) recognizes the right of another person (called an alternate payee and typically a spouse, former spouse or child) to receive all or a portion of your retirement account benefits. A QDRO is a judgement, decree or order made by the court that relates to child support, alimony payments or marital property rights.
The QDRO must contain certain specific information, such as the participant and each alternate payee's name and last known mailing address, and the amount or percentage of the participant's benefits to be paid to each alternate payee. A QDRO may not award an amount or form of benefit that is not available under the plan.
A spouse or former spouse who receives QDRO benefits from a retirement plan reports the payments received as if he or she were a plan participant. The spouse or former spouse is allocated a share of the participant's investment. A QDRO distribution that is paid to a child or other dependent is taxed to the plan participant.
An individual may be able to roll over tax-free all or part of a distribution from a qualified retirement plan that he or she received under a QDRO. If a person receiving QDRO payments is either the employee's spouse or former spouse (not as a non-spousal beneficiary), then he or she can roll it over, just as if he or she were the employee receiving a plan distribution and choosing to roll it over.
We have sample QDRO forms and checklists available if you or your attorney require assistance in preparing your QDRO.