Qualified Domestic Relations Order (QDRO)
A court order dividing a retirement plan in a divorce.
What is Qualified Domestic Relations Order (QDRO)?
Directs a qualified plan to pay part of a participant's benefit to an alternate payee, usually a former spouse. Distributions to the alternate payee under a QDRO are exempt from the 10% early withdrawal penalty, though they are taxable unless rolled over.
Qualified Domestic Relations Order (QDRO): a worked example
A 40-year-old ex-spouse receives $150,000 from a 401(k) under a QDRO and takes some in cash without penalty.
More terms in Retirement Plans, Accounts & Trading
IRA Rollovers vs. Transfers
60-day rollovers are limited to one a year; direct transfers are unlimited.
10% Early Withdrawal Penalty & Exceptions
Distributions before 59 1/2 cost 10% extra, unless an exception applies.
Solo 401(k)
A 401(k) for a self-employed owner with no employees other than a spouse.
Defined Benefit Plan
A pension promising a specific benefit; the employer bears the investment risk.
Defined Contribution Plan
An individual account plan whose payout depends on contributions and returns.
403(b) Plan
A salary-deferral plan for public schools and 501(c)(3) nonprofits.
457 Plan
Deferred compensation for state and local government employees.
SIMPLE IRA
A low-cost plan for employers with 100 or fewer employees.
All Retirement Plans, Accounts & Trading terms · Full glossary