Tax Facts

Nonqualified Retirement Plans and QDROs: A Unique Position, Jan. 17, 2019

Jan. 17, 2019

Qualified domestic relations orders (QDROs) are court orders that divide retirement assetspursuant to a divorce settlement. Qualified retirement plan sponsors must honor QDROs anddivide a participant's retirement assets according to the court-mandated terms. Nonqualifiedretirement (or "top hat") plans, however, are not required to honor QDROs and, in somecircumstances, may not be permitted to divide the retirement assets in question. In determiningwhether to honor a QDRO, the plan sponsor should consider whether the company has
sufficient assets to make a payment prior to the participant's retirement, or whether it would beadministratively feasible to honor the QDRO by paying and dividing the benefits when theywould be due to the participant upon retirement. For more information on QDROs, visit TaxFacts Online and .


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