Early in the experience of a divorce, most people hope for a short, simple and relatively positive experience while also fearing something quite different.
Retirement accounts, for example, affect your quality of life over the long term and, even under the best of circumstances, can often be hard to fully understand. The thought of tossing them into a struggle over a couple’s assets can create a lot of anxiety.
That is one of the beautiful things about Qualified Domestic Relations Orders. They exist to make something possible out of something seemingly impossible.
Federal government watches retirement accounts closely
The federal government created the powerful 1974 Employee Retirement Income Security Act (ERISA) largely to prevent shady dealings with health and retirement funds. It tightly regulates employee benefits packages and pensions. You cannot just cut them up and pass them around however you like.
However, ERISA is smart enough to provide a process for divorcing couples to take hold of their own futures and figure out how to split up the assets they have accumulated during their lives together.
It allows an ERISA-empowered judge to approve the separation of retirement accounts you, your spouse, and your respective attorneys have designed together and agreed upon.
Judge studies what you and your spouse agree to
From the point of view of the federal government and the judge, the main sticking point is whether your agreement is consistent with the standards of the specific retirement plans in question, and with ERISA’s requirements for a Domestic Relations Order.
The judge, in other words, decides the “Qualified” part of the Qualified Domestic Relations Order, or QDRO.
(Some people pronounce QDRO as “CUE-droh,” others “QUAD-roh.” You should probably pronounce it the same way the judge does.)