QDROs – Hidden Costs

For many couples, an employer-sponsored 401(k) plan account can be the most valuable asset in a marital estate. 

Federal law allows a state court to enter an order dividing the marital share of a 401(k) account and other types of retirement benefits between the spouses. The courts refer to it as a Qualified Domestic Relations Order, or QDRO. 

Most plans have a sample QDRO that they give to the attorney or pension consultant who is writing the order. 

You and your attorney should be aware that some plans are now actually charging a fee for processing a QDRO, even if it was prepared using the plan’s own sample order.  

According to the Alaska Court System, a plan can pass on the cost of processing a QDRO to the employee or spouse if it is allowed under provisions of the plan.   

It is important to know whether a plan charges a processing fee. It’s always better to cover details such as allocating processing fees before the divorce is final so that once the decree is entered there is nothing left to do.

Posted in: Divorce