Qualified Domestic Relations Orders - Division of Retirement Accounts

In every Colorado divorce case, the Court will issue an Order equitably dividing the assets and liabilities of the marriage. To be clear, equitably dividing the assets and liabilities does not necessarily mean a 50%/50% division, but instead, it means a fair division based on the facts and circumstances of each individual case.

A key component in this analysis is the division of any retirement accounts. It is critical that if a retirement account is going to be divided in a divorce case by a Qualified Domestic Relations Order (QDRO) (it is not necessary that all retirement accounts be divided by QDRO i.e. IRAs), that certain rules are followed in the preparation and execution of the QDRO.

First, most QDROs have to be entered within six months of a Divorce Decree, but best practice is to follow up on the same as soon as the Decree is entered.

Second, it is important to be aware that there are separate costs for the preparation and facilitation of a QDRO. Right now, the typical pricing for a QDRO in Colorado is anywhere from $400.00 to $800.00. Typically, the parties share this cost equally, but said costs are subject to negotiation.

Third, it is critical to assign responsibility for overseeing the many steps of the QDRO process to either spouse to ensure the process is completed in a timely manner. Typically, we include a provision in our Separation Agreements that requires both parties to cooperate and act in good faith in complying with the QDRO process.

Fourth, the specific retirement plan “Plan Administrator” must approve the QDRO Form before it is executed by the parties and presented to the Court. Typically, a draft QDRO is presented to the “Plan Administrator”and that individual will tell the parties if any revisions need to be made before the same is presented to the Court – or the “Plan Administrator” will let the parties know the same is approved and will be accepted upon the Judge signing the QDRO.

Finally, it is critical that the QDRO drafter have the requisite expertise to do so. This is especially important for QDROs that divide pensions and even more so, for those that do not establish a “separate interest” for the non-employee spouse. Typically, a QDRO specialist is an attorney, certified public accountant and/or an actuary, though most Family Law attorneys are not QDRO specialists. Thus, we recommend specialists to perform this task.