Qualified Domestic Relations Order (QDRO)
A court order that divides a retirement plan between divorcing spouses without triggering early withdrawal penalties or taxes.
Understanding Qualified Domestic Relations Order (QDRO)
A QDRO instructs the retirement plan administrator to pay a specified portion of one spouse's retirement benefits to the other spouse. It applies to 401(k)s, pensions, and other employer-sponsored plans governed by ERISA. Without a QDRO, transferring retirement funds would trigger taxes and penalties. Drafting a QDRO requires precision — errors can cause costly delays or rejection by the plan administrator.
Real-World Examples
The QDRO awarded her 50% of his 401(k) balance as of the separation date.
Related Terms
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This definition is provided for educational purposes only and does not constitute legal advice. Divorce laws and terminology may vary by state and jurisdiction.
Always consult a licensed attorney in your area for advice specific to your situation.