By way of background, a QDRO stands for a Qualified Domestic Relations Order. It is an order in the United States that enables a non-employee spouse to become a participant or receive monies from an employee spouse’s retirement plan. 

It is usually best to have the terms of your QDRO agreed to and approved by the plan administrator before your divorce is finalized. Otherwise you may be facing an uphill battle to get everything settled properly. Why?

Risk 1— Retirement plan has restrictions that prevent withdrawals

Imagine you find yourself financially constrained and need to withdraw money from your spouse’s retirement account for medical reasons or other matters. Yet, your QDRO has not yet been prepared let alone approved by the plan administrator. What are the risks of this situation?

The retirement plan may have certain restrictions within it that prevent you from accessing funds until you reach retirement age. There may be certain trigger events such as only certain types of medical situations allow for a withdrawal of monies from your retirement account. If you are experiencing a medical challenge and need to pay medical bills yet your retirement plan has certain terms and conditions that restrict monies from being withdrawn you may be out of luck. The plan administrator will not approve of your QDRO.

Risk 2 — Your spouse already received a lump sum distribution after your divorce

What happens if your spouse has already received a lump sum distribution from the retirement plan  after your divorce is finalized. For you, as the non-employee spouse, to access the funds in the retirement plan the rules state the plan administrator needs to approve your QDRO. Yet, if a QDRO does not exist and the divorce decree does not clearly spell out the terms and conditions how the retirement plan will handle these issues then you may have a tough time getting access to those monies. You will likely find yourself back in court to re-open your divorce decree.

Risk 3 — Your spouse passes away between settlement date and approval of QDRO

Imagine a different scenario where your spouse passes away between the time you finalize your divorce decree but before your QDRO was approved. What could happen under these circumstances? Certain retirement plans have survivor benefits. If your QDRO is not approved by a retirement plan administrator before your spouse passes away then the named survivor in the retirement plan may receive the benefits. You may not receive any monies at all. In other words, the monies could be funneled directly to the survivor as the QDRO was not approved before your divorce was finalized.

Risk 4 — The pension plan will not pay out in lump sums, only over a period of time

Imagine a pension plan has certain restrictions inside it that prevent plan participants from receiving lump sum payments. In other words, the pension plan will only pay out funds over a period of time and on a monthly basis. If you need the funds from the pension plan immediately yet the pension plan has these types of restrictions you will likely find yourself constrained. Since your divorce has been finalized there are no other assets to trade per se. Unless you go back to court to revise your divorce decree, assuming your spouse is still alive, you end up having to comply with the terms and conditions of your divorce decree and the constraints of the retirement plan too.

What happens if you are over a certain age and recognize your skills have shifted in the market and your future income might be at risk. You might have been relying on payments from the retirement plan to supplement your income. Yet, you never had a QDRO approved by the plan administrator. Similar to the above scenarios, under these circumstances you find yourself between a rock and a hard place to navigate through these situations successfully. You may discover you have to wait until time passes and live life under a different standard of living than you might prefer.

Having your QDRO prepared and approved by the plan administrator is key to avoiding many of these issues before your divorce is finalized.

About the Author

Larry Smith is a Founding Partner of Divorce Outcomes, a specialized professional services firm that manages all of the financial aspects in a divorce process. Since 2003 he has worked as a trusted financial advisor, financial advocate, divorce architect and technical financial expert; he is not an attorney. He is an alumni of KPMG and Andersen with expertise in technical accounting, forensics, sophisticated taxation, management consulting, risk management, advanced process engineering, business combinations, divorce management, multi-party negotiations, advanced quality analytics and cognitive performance technologies. Since 1986 Larry has been advising individuals and organizations about innovative financial solutions to resolve complex financial challenges that arise in life and in business.

For both personal and business divorces, Larry is considered an expert in divorce strategies, divorce process management, financial divorce architecture, financial risk management, taxation for divorces, financial divorce forensics, advanced divorce analytics, financial divorce negotiations and mediation, business valuations and sophisticated equity structures. He helps clients shape complex financial decisions, manage communication risks and ever-changing negotiating positions to strategically preserve or grow wealth from these types of transactions.

If You Have a Question

If you have a question, feel free to contact me at [email protected] or 617-680-5222. The call is free. I will spend 30–60 minutes with you. I will provide you an honest assessment as to where I think you are positioned in your divorce process or answer any questions you have. I may provide you some guidance, insight or advice that you can take with you as you wish. There is no obligation to move forward. The phone call is designed to ease your fears, provide you some options to pursue and a potential road to run on that can lead you down a path to achieve a successful outcome.

About Divorce Outcomes

Divorce Outcomes is a specialty services firm that helps people both domestically and internationally manage all of the financial decisions that arise in their divorce process. We are not attorneys. We are financial experts who partner with our clients as their personal financial advocates. We help our clients manage their divorce process, uncover hidden financial risks, architect divorce solutions, manage ever-changing negotiating positions, communicate complex financial matters and close the divorce process as soon as possible with a goal to arrive at the best outcomes possible. Throughout the process we evaluate the current state of our clients’ financial lives with an objective to best reposition their future. We do not sell any products. We simply raise issues that are in our clients best interest. Our clients share with us we:

  • unfold, analyze and repackage their financial life so they are well positioned after their divorce
  • preserve the value of their business or marital estate
  • continuously strive to provide a return on our services
  • build balanced financial solutions grounded in evidence
  • find ways to make our client, and at times both parties, money through the process
  • design their divorce to work for them and their family’s life
  • provide mental clarity to make decisions
  • reduce the total process time from start to close
  • minimize the stress and unpleasant memories that can last a lifetime

As we reach an agreed upon settlement structure, we help our clients identify a fitting attorney who can leverage the financial solution to draft and record the requisite legal documents. Where outcomes are at risk from a traditional process, we function as expert financial negotiators or financial mediators to turn around the situation and achieve our client’s desired outcomes.

Learn more about us at or review our blogs to gain a clearer understanding about our approach and how we maximize the financial outcomes for our clients.


This communication is for general informational purposes only which may or may not reflect the most current developments. It is not intended to constitute formal advice or a recommended course of action as every person’s situation is unique and different. The information here is not intended to be, and should not be, relied upon by the recipient to make a decision without professional guidance.

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