Intro

This Arizona QDRO Beginners Guide is intended for people going through a divorce (not divorce lawyers) and will help explain what you need to know about QDRO’s for your own divorce.

What is a Qualified Domestic Relations Order?

A Qualified Domestic Relations Order is commonly referred to as a QDRO, pronounced Qwah-jro (or QUADRO). Put simply, a QDRO is a technical order that provides instructions for a retirement plan administrator to divide retirement benefits.

More specifically, the QDRO will direct the plan administrator to provide specified retirement benefits to an Alternate Payee (usually the former spouse) out of the benefits payable to the Plan Participant (the spouse who owns the retirement benefits).

While it is possible to use a QDRO to collect support payments, it is mostly used to divide retirement assets as part of the division of assets in a divorce, such as dividing a 401k, pension benefits, and other retirement benefits.

Why is a QDRO Required?

If you are supposed to receive all or a portion of your spouse’s retirement benefits, such as a pension or 401k funds, then you MUST have a QDRO done to be legally entitled and actually receive those benefits.

Many people do not understand that a QDRO is required even if your divorce decree says you are awarded, for example, $100,000 or 50% of your spouse’s 401k. Even though this specific award is included in your divorce decree, and the decree is signed by the judge, it is not sufficient for the retirement plan administrator to give you your share of the retirement.

Because retirement assets and QDRO’s are governed not only by state law, but also ERISA and the Internal Revenue Code, you need to have a QDRO that qualifies under ERISA to receive your share of the retirement assets awarded in the divorce decree.

Without a QDRO, you will not get your share of the retirement.

When Should I Get a QDRO?

In an ideal world, you would submit the QDRO for the judge to sign at the same time you submit a Consent Decree (if you settled your divorce), or at or around the time of your divorce trial.

However, in most cases, a QDRO is not submitted until long after the divorce is over. This is less than ideal.

Get in touch with a QDRO Attorney

If you are still going through a divorce, you or your attorney should contact an experienced QDRO attorney to obtain assistance in preparing a QDRO for the judge to sign at or immediately after the conclusion of the divorce. In addition, a good QDRO attorney can help explain what documents will be needed to understand your share of the retirement, the retirement benefits available, and how to prepare a proper QDRO to adequately protect your rights.

If your divorce is over and you were awarded retirement benefits from your spouse’s retirement, then you should contact an experienced QDRO attorney immediately.

In some cases, people are directed by the court to obtain a QDRO and pay for the costs 50/50 with their ex-spouse. In other cases, no real direction is provided other than an award of retirement benefits.

Either way, time after the divorce is your enemy. This is true even if you own the retirement and your spouse is the one who is supposed to get a share of your retirement.

Negative Consequences

Unless and until a QDRO is entered by the court and approved by the retirement plan administrator, the retirement benefits/assets can be in legal limbo and various negative consequences may transpire.

For instance, your spouse could cash out his/her 401k before you complete a QDRO, leaving you with nothing other than a possible chance to chase after your ex for the assets you should have received.

Alternatively, your retirement assets could grow, possibly resulting in your ex receiving an even greater share of your retirement assets. Further still, depending on the clarity of the instructions in the QDRO, your spouse may end up with holdings within your retirement benefits that are more desirable, leaving you with less desirable holdings within your retirement account.

In sum, you do not want to delay getting a QDRO. Even if your divorce case is just starting out, you might as well engage a good QDRO attorney in Arizona to help put you on the right path and be prepared to get the QDRO done as soon as possible.

Where Should I Get a QDRO?

In Arizona, most divorce and family law attorneys will refer QDRO drafting out to select attorneys who focus on QDRO’s. In over 10 years of practice, I have only met a few attorneys who will draft their own QDRO’s for their clients. Every other attorney will refer their clients to a handful or so of attorneys throughout the state to prepare QDRO’s.

The fact that probably 100-200 attorneys throughout the state will not prepare a QDRO for their own client should tell you something about the potential complexity of a QDRO. While a QDRO may be seemingly straightforward, there are a multitude of issues that can create all sorts of problems.

For most people, retirement is the second largest asset to divide in the marriage. While you might be able to find a doc prep company to prepare a QDRO for you for under $1,000, most attorneys will only charge around $1,000 to $1,500 to prepare a QDRO. Saving a few hundred dollars to prepare the single document responsible for ensuring you get your share of tens or hundreds of thousands of dollars is the epitome of being penny wise and pound foolish.

Find a good QDRO attorney in Arizona to assist you. The peace of mind alone will be worth it. If you are interested in our service, we generally prepare most QDRO’s for a flat fee of $1,000.

How Much Does a QDRO Cost?

As stated above, a QDRO will generally cost around $1,000 to $2,000.

In many cases, the court will order both parties to equally share in the cost of preparing a QDRO. Thus, the cost would be shared, totaling around $500 to $1,000 each.

Will I Need More than One QDRO?

Maybe. A QDRO is needed to divide the retirement benefits of a particular plan. So, if there are multiple retirement plans to divide, then multiple QDRO’s would be needed.

However, depending on the situation, we can prepare only one QDRO to divide one retirement plan, using an amount that “equalizes” the retirement assets to be divided amongst multiple accounts. This requires both parties to agree to the division/equalization and will not work if one of the retirement plans is a pension.

That being said, we will do what we can to keep the number of QDRO’s down whenever possible.

How Do I Get Started?

If you think you need a QDRO, and want to secure your retirement assets, or make sure you and your ex are financially separated for good, then you can contact us here to get a free 15-minute QDRO consult.

What if I have More Questions?

You can check out our Arizona QDRO FAQ here, or you can submit your questions about QDRO’s. We’ll get back to you as soon as possible.