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What Is A QDRO In New Jersey?

A “QDRO” is short for Qualified Domestic Relations Order. It is designed to be used during a divorce to give a retirement account in its entirety or a portion of it to the spouse of the person who earned it in an employment plan. QDROs are used in New Jersey and other states as well. The spouse who earned the retirement plan is known as the “participant spouse.” The spouse who will receive a portion or all of it in the divorce is known as the “nonparticipant spouse.”

In a QDRO, the judge in the divorce proceeding will sign an order that tells the retirement plan to provide the distribution of the retirement account to the nonparticipant spouse. A QDRO is used in certain retirement plans, while others can simply be divided through a conventional order.

Explaining QDRO During A Divorce 

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When a New Jersey couple is divorcing, a retirement account is viewed as marital property. When there is a divorce, if the nonparticipant spouse is due to receive a part or all of the participant spouse's retirement account, a QDRO will be prepared by the attorneys and the judge will be given it to sign.

In the QDRO, it is stated how much of the retirement account the nonparticipant spouse is set to receive as part of the divorce settlement. The plan administrator of the retirement account will then be directed to provide the retirement account or a portion of it to the nonparticipant spouse. It is given to the nonparticipant spouse in cash through a check or other means like a wire transfer. There are no tax penalties for this disbursement.

The attorney might have the transfer prequalified by contacting the plan administrator to make sure that the QDRO is filled out as required to complete the transaction. Once the plan administrator okays it, the QDRO goes back to the judge for signature and then is sent back to the plan administrator. This is not an overnight process.

Distribution Of Retirement Plans Via QDRO?

Only certain types of retirement plans are eligible for QDRO. A defined benefit plan is also commonly referred to as a pension. This pays an employee after retirement, usually on a monthly basis. It is generally part of the employer's compensation plan to the employee and the employee receives pension benefits for the rest of his or her life.

A defined contribution plan is one in which the employer and employee both contribute to a fund and the fund's value increases as time passes. When he or she retires, the employee will be able to access the money in the plan. There are sometimes penalties for withdrawing on these funds early. The types of plans included in a defined contribution plan include 401K, 403B, profit-sharing plans, and employee stock ownership plans.

What Else Should Be Known About A QDRO?

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QDRO orders are unable to divide the following plans: individual retirement accounts (IRAs), pensions from the government or military, deferred annuities plans, and any other kinds of retirement plans that do not qualify.

These plans might be able to be divided in the event of a divorce, but a QDRO will not be part of the process. A conventional court order is used for the division of an IRA or a deferred annuities plan. With other plans, there might be a contingency as to how the money will be divided if there is a divorce.

When there is a divorce and a retirement plan is being divided, it can be a complex process. Certain things must be considered before jumping in such as: how much the plan is currently worth and what it might be worth in the future, how much of the plan a nonparticipant spouse is entitled to, if there are tax liabilities with certain retirement plans, knowing when it should be divided, and what will be the benefits to the survivor if the participant spouse dies prior to retiring.

Contact A New Jersey Divorce Lawyer About QDROs

Dividing up the assets in a divorce can be a complicated process and that holds true with a QDRO. Depending on the type of retirement account the participant spouse has, the nonparticipant spouse might need to file a QDRO to receive the retirement benefits as part of a divorce settlement. An experienced attorney can help you with acquiring the benefits that come from a retirement account belonging to your spouse. If you or a loved one are in the process of getting divorced in Monmouth County, Ocean County or anywhere else in New Jersey and are wondering about QDROs, the attorneys at the Law Firm of Villani & DeLuca, P.C. in Point Pleasant Beach, New Jersey can assist you.

Other Resources For QDROs

The Division of Pensions in a Divorce

Asset Protection During Divorce In New Jersey

Finding Hidden Assets In A New Jersey Divorce

Tips For The Best New Jersey Divorce Settlement


Whether you are from Middletown, Howell, Jackson, Toms River or any other town in New Jersey, it is imperative to have legal assistance when attempting to receive retirement benefits by filing a QDRO. The attorneys at Villani & DeLuca, P.C. can help you. Call 732-965-3404 today to discuss your case.

Vincent DeLuca, Esq.

As a founding partner at Villani & DeLuca, Vincent DeLuca is one of only a few Certified Matrimonial Law Attorney in Ocean County, New Jersey. Mr. DeLuca has helped many clients navigate the delicate details of their own divorce. Mr. DeLuca is also a trained divorce mediator and collaborative divorce attorney. Call today at (732) 965-3404 to speak to Mr. DeLuca or one of our experienced NJ Divorce Lawyers.

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