If your future former-spouse has a retirement plan, or a number of those plans, through an employer you are probably entitled so some portion of the plan or plans (usually a share depending on the lengths of marriage in relation to length of employment). How you calculate your share is part of the divorce process, either through settlement or trial.
Once all that work determining the division of the plan is completed, and the decree of divorce is entered, the one of you (usually the person receiving the benefit of the division) has to prepare what is know as a Qualified Domestic Relations Order, or QDRO. The QDRO is a separate order from the court, but it is based on the provisions of the divorce decree that relate to the retirement plan (in essence, the plan administrators don’t want to read everything in your decree; they are just interested in the part of the decree addressing the retirement). As such, one cannot truly prepare a QDRO before the decree is entered by the court.
Again, QDROs are only required on employer-employee, or work-based plans. And, you need a separate QDRO for each such plan. As to other types of plans, the process is different and will be addressed separately.
In preparing a QDRO, one needs to ensure the QDRO fully represents and contains the intent of the parties as set forth in the divorce decree. And you should probably work with a lawyer who has knowledge and experience in preparing QDROs; not all divorce or family lawyers have this experience; and an error could result in the plan administrator rejecting the QDRO meaning you have to go back to square-one, and explain to the other spouse and the court why you are having to re-file everything over again. It is best to get it correct the first time.
Your local account broker, or investment advisor, may not be the appropriate person to only consult. That person may not know the requirements of a QDRO and point you in the wrong direction — I recently had a client whose broker insisted that a QDRO was required on a personal, not a work place, account. It took some extra time, and cost to the client, to educate the broker on this point — that QDROs only pertain to plans with an employer.
In addition to my work in the divorce area, including appropriate division of retirement accounts based on property allocation and “fault” in the divorce, I have experience in communicating with plan administrators and having QDROs appropriately prepared and approved by the administrators and the courts.
