New Jersey Divorce Lawyers Blog
Other than real estate, often times the largest assets to be distributed in a divorce are the parties retirement assets. Retirement assets include pensions, IRAs, 401ks, 403Bs, deferred income, and other funds allocated for retirement. The question arises – how are the assets physically distributed? What mechanism is used to transfer the funds from one party to the other? The answer is the qualified domestic relations order (QDRO).
A QDRO is a court order directed to the administrator of the retirement asset that needs to be divided. A QDRO is necessary because the administrator of the retirement asset cannot transfer any portion of one party’s retirement asset to anybody else without a court order. The QDRO is that court order. It as an order which is prepared and forwarded to the judge in the divorce case for the judge’s review and signature. The order orders, empowers and authorizes the retirement account administrator to transfer retirement funds from one party to another during or after a divorce. Decades ago attorneys prepared QDROs and submitted them to the courts. However, over the past 20 years an entire industry has grown up dedicated to creating QDROs. These third-party QDRO preparers produce QDROs at a much cheaper cost (usually $400 – $500 per QDRO) than attorney-generated QDROs. For the clients it is a savings. For attorneys it means that they can outsource the QDRO preparation to experts who will be responsible for drafting the court-ready documents. The attorney’s role is to review the documents and make sure that they cover the necessary issues. Continue reading →