| QDRO forms are used for the purpose of dividing | | | | pensions, profit sharing plans, and 401k plans in |
| retirement assets, such as a pension or 401k plan, | | | | divorce results from certain provisions that are |
| in a divorce a proceeding. Regardless of whether | | | | contained in a federal law known as the |
| you live in a community property state (for | | | | Employment Retirement Security Act (ERISA). |
| example. California) or Equitable Distribution (also | | | | Until 1984, two provisions in ERISA raised |
| known as "common law") state, such as New | | | | questions as to whether a state court could even |
| York, the marital portion of a retirement plan is | | | | issue an enforceable order for the distribution of |
| distributable in a divorce case. State laws which | | | | retirement benefits. These two provisions were |
| define what types of property are marital, and | | | | ERISA's: (a) preemption provision, which made |
| thus subject to division in a divorce, are not | | | | regulation of retirement plans a matter of |
| preempted by ERISA. However, the ERISA | | | | exclusive federal interest; and (b) spendthrift |
| preemption requires that division of retirement | | | | provision, which restricted a plan participant's ability |
| assets (pensions, 401k's and similar accounts) be | | | | to assign his or her benefits under a pension plan |
| accomplished through qualified domestic relations | | | | covered by ERISA. |
| orders (QDRO's). | | | | Because of concerns that ERISA's spendthrift and |
| In all jurisdictions, the marital portions of pensions | | | | preemption provisions affected the validity of |
| and other types of 401K plans are presumptively | | | | state court domestic relations orders (DROs), |
| subject to division in divorce. Each year, tens of | | | | Congress enacted the Retirement Equity Act of |
| thousands of qualified domestic relations orders | | | | 1984 to exempt QDRO's from those provisions. |
| are approved by plans and issued by state | | | | Congress provided that the spendthrift provision |
| divorce judges. If a state-specific QDRO sample is | | | | "shall not apply if the order is determined to be a |
| used for guidance. A valid QDRO form can be | | | | qualified domestic relations order [QDRO]." |
| prepared quickly and easily. Upon preparation, the | | | | Consistent with this language, Congress added an |
| proposed QDRO is then submitted to the | | | | exception to the express ERISA preemption |
| retirement plan administrator and the court, for | | | | provision, stating that the preemption provision |
| approval. | | | | "shall not apply to [QDROs] " Under a QDRO, an |
| The necessity of using a QDRO form to divide | | | | alternative payee is treated as a plan beneficiary. |