Qualified Domestic Relations Order (QDRO)
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An IRA is not an ERISA-governed retirement plan, which means there is no need to have a Qualified Domestic Relations Order (QDRO) drafted in order to divide the IRA. Unfortunately, many family law attorneys do not know the difference between an ERISA plan requiring a QDRO and a non-ERISA plan, like an IRA that does not need a QDRO. As a consequence, the QDRO attorney generally has to do a “Clarifying Order” to identify the IRA sufficiently enough for the Custodian of the IRA to recognize and accomplish the division. The Clarifying Order for the IRA allows the Custodian to make the division incident to a divorce (avoiding potential tax consequences and penalties), but the parties will still need to execute distribution forms required by the custodian to actually transfer the money into the other spouse’s account.