Contributing Author: Kristine Custodio Suero, Advanced Certified Paralegal
When going through a divorce, dividing retirement accounts is often one of the most complex — and overlooked — aspects of the process. A Qualified Domestic Relations Order (QDRO) is a legal tool used to divide certain retirement plans. Unfortunately, many individuals (and sometimes their attorneys) make mistakes that can cost them thousands in retirement benefits.
As ERISA attorneys, we see the same errors time and again. Here are the top QDRO problems and how to avoid them — in plain English.
What Is a QDRO?
A QDRO is a court order that allows a retirement plan to pay benefits to someone other than the plan participant — typically a former spouse or dependent. It must meet both federal (ERISA) and plan-specific requirements.
8 Common QDRO Problems (and How to Avoid Them)
1. Waiting Too Long to Prepare the QDRO
Delays can be disastrous. If the participant retires, dies, or withdraws funds before the QDRO is filed and approved, the alternate payee may lose their rights.
- Solution: Begin drafting the QDRO during divorce negotiations, not after the final judgment.
2. Incorrect or Incomplete Plan Information
Using the wrong plan name or not specifying the correct plan type often leads to rejection by the plan administrator.
- Solution: Get a copy of the Summary Plan Description (SPD) and confirm all plan names with the employer or plan administrator.
3. Confusing Different Types of Plans
Defined contribution plans (like 401(k)s) and defined benefit plans (like pensions) require different division language.
- Solution: Ensure your QDRO specifically matches the type of plan being divided.
4. Not Addressing Survivor Benefits
If the participant dies and survivor benefits aren't clearly assigned in the QDRO, the alternate payee may lose all future payments.
- Solution: Always include clear provisions for pre- and post-retirement survivor benefits.
5. Using Generic Templates
Many plan administrators provide model QDROs — but they aren't tailored to your case and may omit critical terms.
6. Ignoring Pre-Approval by the Plan Administrator
Submitting a QDRO directly to the court without getting feedback from the plan administrator often results in rejection.
- Solution: Send a draft to the plan administrator before finalizing the court order.
7. Mismanaging Taxes on Distributions
If retirement funds are paid directly to the alternate payee instead of rolled over, the IRS may impose early withdrawal penalties.
- Solution: Ensure the QDRO allows a direct rollover to an IRA or another retirement plan when applicable.
8. Forgetting to Divide All Plans
Often, only the most obvious retirement plans are addressed, leaving out pensions or accounts from former jobs.
- Solution: Consider all employment during the marriage, determine if there was a retirement plan offered by the employer, and subpoena retirement plan statements when needed.
Final Thoughts: Why Legal Guidance Matters
Navigating the QDRO process is not just paperwork — it's protecting your future. A mistake in dividing retirement benefits can have lasting financial consequences. That's why it's essential to consult with a legal professional who understands the nuances of both divorce law and ERISA.
Need help drafting or reviewing a QDRO? Our experienced ERISA attorneys are here to guide you every step of the way. Contact us today to safeguard your retirement interests.
*Nothing stated herein is to be construed as legal or tax advice and shall not form any attorney-client relationship. Each individual situation is unique. Please contact us and speak with one of our attorneys regarding your individual situation.
