What Is a Qualified Domestic Relations Order (QDRO)? Requirements [Video]

A qualified domestic relations order (QDRO) is a legal document typically found in a divorce agreement. It recognizes that a spouse, former spouse, child, or other dependent is entitled to receive a predefined portion of the account owner’s retirement plan assets.

According to the Internal Revenue Service (IRS), a spouse or former spouse must report the QDRO benefits received “as if he or she were a plan participant.” The QDRO grants the spouse a percentage of the participant’s investment in the contract, with the numerator being the present value of the benefits payable to the spouse and the denominator being the present value of all benefits payable to the participant.

Once the distribution is made, the former spouse becomes responsible for any taxes due. The former spouse can, alternatively, roll over the assets received from a QDRO just the same as an employee could receive a distribution and roll it over into another retirement account. However, …