403(b) / 457(b)Transactions/QDRO: What is a Qualified Domestic Relations order?

A Qualified Domestic Relations Order (QDRO) is a court order for matters related to family or domestic relations and obligations which meet the specific requirements of Section 206(d)(3) of ERISA and IRC section 414(p). If a QDRO does qualify by meeting the requirements it allows a distribution to be made from the participant’s account to a payee other than the participant in order to meet those obligations. Usually a QDRO is in question when there is dissolution of marriage or for child support orders.

All QDRO’s must be reviewed and only authorized by the Plan Sponsor or Administrator if the requirements are met. If the order does not qualify and a distribution is made incorrectly, the entire plan can become disqualified which could result in all of the assets in the plan becoming subject to taxation and /or penalties, not just the participant’s assets under the plan.

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