QDRO & DRO

Qualified Domestic Relations Order • Domestic Relations Order

As part of divorce proceedings, when marital assets include a pension or other retirement fund, a special court order called a "qualified domestic relations order" (QDRO) is an essential part of the divorce settlement. The QDRO divides and changes ownership of a retirement plan, establishing the legal right of one spouse to receive a designated percentage in the pension or retirement plan of the other spouse. The QDRO must comply with the requirements set by each pension or retirement plan and, more often than not, the pension or retirement plan administrator has to approve the order for it to be enforceable.

The spouse entitled to the money will also be responsible for paying the related income taxes when the money is received, whether in the form of a pension, an annuity or withdrawals.

When eligible, the receiving spouse can withdraw his or her share in one lump sum or elect to receive monthly benefits. If the plan permits it, the QDRO arrangement also permits the receiving spouse to immediately roll his or her share into his or her own IRA. The IRA rollover procedure allows the ex spouse to manage his share of the money while postponing taxes until funds are withdrawn from the IRA.

DRO

A DRO refers to a domestic relations order. It is a court judgment, decree or order including approval of a marital settlement agreement, that provides for and specifies the amount and schedule for spousal or child support payments, or sets the terms for division of marital property.

At the Law Offices of James T. Raetz, we regularly assist our clients with both QDROs and DROs. If you have questions about such orders, call our law firm at (310) 242-6012 or (626) 823-5556 to arrange a consultation.