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February 16, 2009

Qualified domestic relations order (QDRO)

Your Guide



A  qualified domestic relations order (QDRO) means a domestic relations order (DRO) which creates or recognizes the existence of an alternate payee’s right to ( or assigns to an alternate payee the right to) receive all or a portion of the benefits payable with respect to a participant under a plan, and  meets the following requirements:

It must clearly specify the following:

  1. the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate payee covered by the order,
  2. the amount or percentage of the participant’s benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined,
  3. the number of payments or period to which such order applies, and
  4. each plan to which such order applies.

And meet the following requirements

  • does not require a plan to provide any type or form of benefits, or any option, not otherwise provided under the plan,
  • does not require the plan to provide increased benefits (determined on the basis of actuarial value), and
  • does not require the payment of benefits to an alternate payee which are required to be paid to another alternate payee under another order previously determined to be a qualified domestic relations order.

QDROs are issued for qualified plans, 403(b) plans and 457 plans

Referring Cite

IRC §414(p)(1); ERISA §206(d)(3)(B)

Additional Helpful Information

  • Distributions paid directly to alternate payees are not subject to the 10% early distribution penalty. However, if the spouse or former spouse alternate payee rolls over the amount to his/her own IRA or other retirement account, and then takes a distribution from that account, the distribution will be subject to the 10% early distribution penalty, unless he/she is at least age 59 ½ when the distribution occurs or qualify for an exception to the penalty. Cite: Internal Revenue Code (IRC) § 72(t)(2)(C).
  • A common mistake is for QDROs to be prepared for IRAs. However, QDROs do not apply to IRAs. IRC §414(p)(9)

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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