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The interplay between retirement accounts, a QDRO and divorce

When California residents secure employment and begin to earn wages, they may choose to have some form of retirement account. A retirement account is generally some type of investment or set of investments that are intended to be held for a long duration of time so that workers may have some funds available at the time they chose to stop working. However, when a person with a retirement account goes through a divorce, it can be challenging to know how the retirement accounts will be divided in the property settlement.

During the property division and settlement process of a divorce, the couple may have a qualified domestic relations order created. Also known as a QDRO, this type of order is particular to retirement accounts. It will designate if an alternate payee may receive some or all of the retirement funds from an individual's retirement account.

The United States Department of Labor provides some information on what a QDRO is and who may qualify for one. There are limits on who may be considered an alternate payee. Only a retirement account holder's spouse, ex-spouse, kids or other dependents may qualify, and a QDRO must provide specific information in order to qualify. This information includes, but is not limited to: the names and addresses of the account holder and alternate payees; the name of the qualifying retirement account; and the amount of the account the alternate payee or payees are to receive.

A QDRO is a complicated legal device that can divest an individual of hard-earned retirement investments. They must be included in a property division settlement during a divorce and are subject to state and federal regulation.

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