A QDRO is a Qualified Domestic Relations Order. If you’re getting divorced, this could be a very important document. It could even open up doors to significant assets that many people overlook in divorce.
Essentially, a QDRO divides retirement assets. They get overlooked because the other spouse may not even be getting the payments yet, so people often do not realize they have a right to them.
For instance, maybe your spouse has to work for 40 years to earn his or her pension plan. They worked for 10 years before you got married. Then you stayed married for 20 years. After the divorce, they plan to put in another 10 years, retire and finally start getting those payments.
You never saw any money during your marriage, of course, so you never thought about the pension. However, you may have a right to some of the pension for the time you were married.
If you get 50% from that time, you would get 25% of the total pension in the example written above. You were married while your spouse earned half of their pension and, when they start getting the money a decade from now, you deserve half of that portion. If the pension pays them $4,000 a month, roughly $1,000 per month should go to you as an alternate payee.
Clearly, this example is just to illustrate how the process works. Every case is different, with a multitude of factors to take into account. The key is just to remember that you may have a right to those assets and to know what legal steps to take to get what you deserve.