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What Is a Qualified Domestic Relations Order, and What Do I Need to Know About It for My Divorce Case?

What Is a Qualified Domestic Relations Order, and What Do I Need to Know About It for My Divorce Case?

A qualified domestic relations Order (QDRO) is recognized by the Internal Revenue Service as the proper legal tool for dividing “qualified” retirement accounts. Although there are fewer companies today offering any retirement benefits, when a qualified plan exists in a divorce, it may be divided by the court between the parties under the one-pot marital theory.1 Under the relevant code section contained in the Divorce Act, the court is to presume an equal division of the marital estate is just and equitable.2 The “marital pot” contains all assets acquired before the marriage and brought into the marriage and acquired during the marriage up to the date of the final separation of the parties.3 This pot is presumed to be divided equally.4 This blog covers the basics of QDROs.

QDROs are tricky to begin with because they contain monies that have yet to be taxed at the income-earner’s tax rate, which will presumably be lower when he or she retires. Thus, if the QDRO is valued at $200,000 and owned by one spouse (at least before the divorce finalized) and there is a post-tax investment account worth $200,000, these are not the same dollar for dollar as it costs more to build a post-tax account. The divorce court has to account for the tax consequences5 of this division so, presupposing these are the only marital assets, giving each to the titled owner would not be an equal division because when the money in the qualified plan is taxed it will be at a much lower rate.

For this reason, it is common for a divorce court to divide pre- and post-tax accounts equally. While this may be the court’s order, it does not matter to the IRS or qualified plan administrator. The funds can only be transferred by a QDRO, which is a very technical order the divorce court will not draft, but instruct one of the parties’ attorneys to do. In many companies with qualified plans, the plan administrator has instructions and a proposed QDRO that it will provide to attorneys. The order then has to be approved by opposing counsel, signed by the judge, and then accepted by the plan administrator to divide the qualified plan.

As the plan administrator is not a party to the divorce action, he or she can reject the QDRO if it does not comport with the company’s instructions and proposed order, if they have one. This then creates substantial delay in division of the funds. For this reason, many seasoned divorce attorneys will reach out to the plan administrator before the final hearing to obtain any instructions the company may have covering QDROs and their sample order. If there are quirky requirements, this needs to be placed into the evidentiary record at the final hearing, so the plan administrator’s proposed order is one the divorce court has the authority to sign because it has the evidence in the record to do so as its own (as if it had drafted it) order on division of the qualified plan.

This being the case, the plan has to be valued to be divided by the court. This is typically done by an economist who can take the pension documents and value the qualified plan.6 In most cases, the divorce attorneys will agree to use a specific expert and split or equally divide the cost of the valuation. That said, this still leaves the looming question of when the plan is valued. The court can take any date between the date of separation (which is legally the date of filing) to the final hearing. Practically speaking, the latter is not possible unless the valuator would value the plan on the morning of the divorce trial.

Given that divorces sometimes drag for months to a year or more, the plan may go up or down rather significantly in value depending on the investments it has. Thus, there may be multiple dates of valuation requested by the attorneys. With these different valuation dates, the attorneys can present evidence to the court as to why it is fair and equitable. It divides the plan on the date they propose by introduction of various types of evidence, most likely being the testimony of the parties.

We, the attorneys at Ciyou & Associates, P.C. have handled many QDROs and understand their intricacies. We hope you find this blog post useful in understanding more about QDROs. This blog is provided for general information. It is not tax advice. The blog is not to be relied upon for any actual legal issue or matter, nor is it legal advice. It is an advertisement.


  1. Morey v. Morey, 49 N.E.3d 1065, 1068 (Ind.Ct.App.2016).
  2. Indiana Code section 31-17-7-5.
  3. Indiana Code section 31-17-7-4.
  4. Indiana Code section 31-15-7-5.
  5. Indiana Code section 31-15-7-7; Maxwell v. Maxwell, 163 N.E.3d 338, 341-42 (Ind.Ct.App.2021).
  6. Although the method has been questioned, the coverture formula is the standard method by which pensions are valued.
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