A QDRO must meet all of the following requirements or it is not a QDRO and a distribution will not be allowed:
- The judgment, decree or order is made under a state domestic relations law or community property law;
- The order relates to the property rights, alimony or child support of the participant’s spouse, former spouse, child or other dependent of the participant;
- The order clearly identifies the plan and account to which it applies;
- The order recognizes, creates or assigns a right for another person, called an “alternate payee” to receive all or a portion of assets from a participant’s account or benefits;
- The order specifies the correct name and last known mailing address of the participant and the alternate payee(s). The date of birth and social security number can be included in the court order but are optional. However, they should be provided for identification purposes under a separate document if they are not included in the order;
- The order must specify an amount payable to each alternate payee from the plan. The amount does not have to be a specific number but has to be an amount that can be determined from the terminology in the order. For instance, it can be specified as full value, as a percentage of the value, as an amount that was present at a specific time and date, or it could be a specific amount;
- The order must specify the date, the time period covered, and /or the number of payments to which the order applies;
- The order cannot require any plan to change normal plan provisions, such as vesting or permissible forms of distribution;
- The order cannot create additional benefits than those already in existence for the participant;
- The order cannot require a plan to make a distribution until the participant’s “earliest retirement age” under the plan terms. However, although a QDRO cannot require payment to an alternate payee before the participant’s earliest retirement age, a plan may elect to permit an earlier distribution for administrative reasons. Some plans prefer to make QDRO distributions as soon as possible rather than maintain a relationship with a former spouse or his or her attorney, as often there is hostility present in family matters that the plan would rather not be subject to.
- The order cannot require any plan to pay to an alternate payee any plan benefits that are already payable to another alternate payee under a previous QDRO.
Unless an order meets all of the above requirements, it is not considered to be “qualified”. If it isn’t qualified it isn’t a QDRO so the plan cannot authorize the distribution named in the order.