A judgment, decree, or order by a court that assigns all or a portion of an individual’s company benefits to another person, as in divorce. The order recognizes the right of an “alternate payee” to receive all or part of a retirement or pension plan that belongs to another person.
Under the Retirement Equity Act 1984, qualified domestic relations orders (QDROs) are applicable only to tax-qualified plans, and thus cannot be applied to NQDC plans. This means settlements involving NQDC rest on stipulations in the divorce decree. Usually companies avoid directly paying an ex-spouse instead of the NQDC plan participant. See FAQs on QDROs from the US Dept. of Labor.