The implementation of a Qualified Domestic Relations Order (QDRO) following a divorce involves the division of retirement assets. This legal document instructs a retirement plan administrator to distribute a portion of a participant’s benefits to an alternate payee, typically a former spouse. For example, if a husband’s 401(k) is to be divided, a QDRO is required to effectuate the transfer of funds to the wife.
Properly dividing retirement funds via a QDRO is crucial for ensuring the financial security of both parties post-divorce. It allows the alternate payee to receive benefits that they are legally entitled to, and it protects the retirement plan from future claims. Historically, the lack of such legal mechanisms often left divorced spouses, particularly women, vulnerable in retirement.
