How to Avoid Common QDRO Pitfalls


When drafting language to divide a retirement account by QDRO, protect your client, your liability, and avoid misinterpretation of your Marital Settlement Agreement language by always identifying the retirement account to be divided by stating the legal plan name in your Marital Settlement Agreement language.

The legal name of the retirement plan is different than the 3rd party administrator and often includes the name of the company that the participant works for. The legal plan name is the actual name of the retirement plan, is a unique identifier of that retirement plan, and must be included in the QDRO. The retirement plan may or may not also be administered by a 3rd party administrator. Common examples of 3rd party administrators are Vanguard, Fidelity, VOYA, etc.

Problem: A retirement plan can change 3rd party administrators over time and could potentially have a different 3rd party administrator by the time the divorce and QDRO process are completed. If in the marital settlement agreement, you refer only to the 3rd party administrator when identifying the retirement plan to be divided and the plan administrator changes, it can be difficult to identify the plan that was intended to be divided.

Problem: It is possible that your client could hold multiple accounts from the same employer, or multiple employers, with one 3rd party administrator. Identifying the retirement plan by its unique legal name removes any confusion regarding which account is intended to be divided.

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Qualified Domestic Relations Order Liability

Clients will often provide a screen shot of their account balance that does not contain all of the necessary information for drafting the MSA language and/or a QDRO. We advise that you always request a current statement that identifies the legal plan name of the account to be divided, as well as the current 3rd party administrator if there is one, as a part of your discovery process. Then be sure to identify the plan by its legal name when drafting your Marital Settlement Agreement. This will protect your client and your liability by removing any question regarding the specific account to be divided by QDRO.

Reach out to us today to learn more about how we can minimize your liability and maximize the effectiveness of your Marital Settlement Agreement Language.

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