Usually, when you need a QDRO it is because you have been awarded a portion of the retirement plan in which your spouse/former spouse is a Participant. Occasionally the participant initiates the QDRO, but nine times out of ten, it’s the alternate payee marching in to claim their share.
A QDRO is a Qualified Domestic Relations Order. QDRO is pronounced Quad-row — it’s such a common term these days, I wouldn’t be surprised if you find it in Webster’s.
The purpose of a QDRO is to satisfy the IRS. so that a portion of a qualified retirement plan may be transferred from the participant to another person without triggering a nasty tax consequence.
QDROs are usually used to divide retirement plans, both defined benefit plans (pensions) and defined contribution plans (often 401k plans). QDROs may also be used to pay child or spousal support arrearages — in other words, a QDRO may serve as an order to pay back support directly from the retirement account. It’s a great way to collect if the nonpaying party has a retirement account.