A qualified domestic relations order (QDRO®) is a common tool used during divorce proceedings to divide assets between parties that originate from a qualified account. This concept was created in 1984 when Congress amended a section of the Employment Retirement Income & Security Act of 1974 (ERISA). Although one of the objectives was to simplify divorce proceedings, the word divorce is not actually included in any part of the federal statute governing QDROs.

The in Marriage QDRO® utilizes the same statutory authority to facilitate the transfer of funds between happily married spouses—from a husband’s 401(k) to a wife’s IRA, for example—giving the couple greater investment flexibility and a host of other benefits. It interweaves the ability of married spouses to contract between themselves in order to trigger the application of the federal QDRO laws, resulting in the transfer of 401(k) and pension assets out of the name of the participant spouse and into the name of the recipient spouse. For years, the common understanding was that access to ERISA-based accounts could only be obtained through a short list of qualifying events such as disability, retirement, or divorce. The In Marriage QDRO® (often referred to an an IMQ®) has, in effect, created an additional qualifying event, one that a married couple can plan and control.

Custom and tradition, especially in the law, can often blind a person from the exact wording of a document. This phenomenon is definitely true when it comes to the ability of a married couple to execute a QDRO for estate or financial planning purposes. A simple entry of the phrase QDRO into a Google search engine reveals that everything written about QDROs since 1984 has solely been from the context of a divorce or legal separation. However, federal law never required such a prerequisite, and that this strategy has been sitting there in federal law, dormant, for over 30 years. Now that estate planning attorneys and financial advisors have removed their blinders, it will be exciting to see the application of In Marriage QDRO® applications.

What’s in it for You?

401(k) Plans, Corporate Pension Plans, Profit Sharing Plans and State-Deferred Compensation Plans

A tool previously associated with divorcing spouses works for married couples, allowing them unrestricted access to retirement benefits without penalty. Unrestricted, non-penalized access offers more effective estate planning and protection opportunities for those who serve married clients.


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