QDRO stands for a qualified domestic relations order. It is used to divide a pension or other employer-based retirement plans, the most common being a 401(k) plan. When dividing community assets in a marital settlement agreement, the parties have certain options for dividing retirement plans. Often each party has a retirement plan and the parties agree that each party keeps his or her own retirement plan. That can be a good option, as the costs of preparing a QDRO may be avoided. If each party does not have a retirement plan or, more often, one plan is worth substantially more than the other, a QDRO may be necessary to equitably divide one or more pensions.
Many attorneys specialize in the preparation of QDROs, and many family law attorneys will refer clients out to these specialists to get the QDRO drafted. Typically this is after or concurrently with the entry of a judgment in the case.
In the case of IRAs, they are typically easy to divide, as they are like bank accounts. The parties may agree that the custodian of one account make a transfer to the IRA account of the other party.