A qualified domestic relations order (QDRO) is a separate order from the court that explains how a retirement account is split by a couple at divorce. A QDRO contains specific language and terms that instruct the plan administrator how to divide it and treat it after divorce. The terms must comply with the retirement plan’s guidelines.

QDROs make up an important part of the process of dividing assets. Retirement accounts may represent the largest asset a couple has. It is given certain protection by law that may not be attached to other types of assets. Until 1984, a retirement account was not subject to division in a divorce. A QDRO must be carefully drafted. It cannot require the plan administrator to pay the other spouse more than, sooner than or in a different manner than the spouse whose name the account is titled in can receive payments.

A mediator can help a couple determine terms for their QDRO. There may be many options for the division, such as making a lump-sum payment, paying a monthly payment in retirement years, being made into new retirement accounts or other arrangements. A skilled mediator can walk through each option with the parties. He or she can learn what the interests of the parties are and work on an agreement that protects the interests of both parties. In some cases, a 50/50 split is fair. In other situations, the parties may agree to divide other property differently to decrease the total retirement benefits the non-participating spouse receives.

A mediator can also consider the tax effects of different arrangements and can offer recommendations on how to minimize the amount of taxes that are incurred due to the division of the account. If drafted properly, a QDRO can help avoid a tax penalty for early distribution.