A qualified domestic relations order (QDRO) is an order that gets handed down by a court. It applies to a financial account and determines how that account will be divided. Often, the court issues a QDRO to outline how this division will occur in the future.
One way that this could happen is with a retirement account during a divorce. Say that you are getting divorced in your 50s. Your spouse isn’t retired yet, so they don’t have access to their retirement funds. But the two of you had been planning on using a pension or an employer-sponsored retirement account so that you could both retire.
During the divorce, the court may issue a QDRO saying that a percentage of those future pension payments must go to you. Even though you will be divorced by the time that your ex actually retires, they still have to divide that asset with you – often based on the length of your marriage.
Does this mean you get half of the retirement fund?
Not necessarily. Every case is different. If you and your spouse were married for the entire time that they were earning the retirement account, then you may be entitled to 50%. But otherwise, it may be adjusted for the length of the marriage.
For example, say that it took your spouse 30 years to earn their pension and the two of you were married for 15 of those years. You may end up getting 25% of the payout, which is 50% of the value of the account that was earned while you were married.
This is just one example, but you can see how valuable a QDRO may be and why it’s important to understand all of your options during a divorce.