Divorce Mediation Blog

Did You Know – A Hidden QDRO Cost

Wednesday, July 22, 2015

We learn something new every day.

Between us, we have drafted agreements, written judgments and crafted awards that required parties to create Qualified Domestic Relations Orders (QDRO’s) to transfer retirement assets after divorce. We always knew well enough to opt for IRA-to-IRA transfers when possible, because can usually be accomplished by authorization letter alone, with no QDRO required. This makes sense because it saves drafting and presentment fees as well as processing time.

Then, recently, we set up a 401k plan for ourselves and read some of the fine print, only to learn that the plan administrator has the right to charge hourly-based fees for QDRO processing. Since we never see the back end of the transaction in any of our clients’ cases, we had no reason to know this; and we wonder how many clients or their lawyers are aware of this, either?

Maybe it is unavoidable, and it may not add up to much; but it is one more reason to look more closely at selecting qualified retirement plans before they are divided if only for cost efficiency.

Who knew?

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