A QDRO Is How the Court Splits Retirement Assets

In addition to a judgment of divorce, the court can issue an order that divides retirement assets. A Qualified Domestic Relations Order, or QDRO, is a court order addressed to an asset manager, usually a fund administrator, or a pension department. The QDRO authorizes the division of the asset, like a roll over to the other spouse, or funding a survivor benefit for the ex. Your attorney will draft the QDRO for the Judge to sign. Sometimes a “pension consultant” is hired to draft the QDRO, e.g. when the value of an asset is unclear at the time of divorce such as when there are stock options that haven’t vested yet, or aren’t publicly traded.  

Pro Tip: When one spouse has worked longer than the length of the marriage, something called “compound interest” should be factored in. This is basically the appreciation during the marriage of pre-marital stock.  Especially with 401(k)s, if you’re the higher earner, your attorney should use the “trace analysis” method of valuation.