The QDRO is a court order to a retirement plan administrator defining how two particular parties - the former spouses - are to receive the plan's benefits. QDROs can be used for qualified defined contribution plans and defined benefit plans, including SEPs (Simplified Employee Pension Plans) Keoghs, 457s, 403(b)s. (Retirement plans are said to be qualified, which means they are covered by ERISA and guaranteed by PBGC, or non-qualified, which means they are regulated by ERISA and not guaranteed by PBGC.)

QDROs distribute pensions along approaches known as 1) shared interest (the so-called "if, as and when received" regime), which means that both the worker-spouse (usually the man) and the nonworker spouse (usually the woman) begin to receive the benefits at the same time; 2) separate interest, which means that the alternate payee (usually the wife) receives benefits when she choose; and 3) qualified joint and survivor annuity, which provides for survivorship rights for the alternate payee.

The middle-aged woman who goes into a divorce must pay particular attention to survivor's benefits because she, much more than her husband, is not only more likely to go into retirement with smaller or no pension benefits but also to live longer than her former spouse.

Poorly written QDROs invite not only rejection by the pension plan administrator but also no end of misery to the non-employee spouse, who is generally the wife. The QDRO must be written carefully. It must specify the name of each participant, his or her mailing address and that of the alternate payee, the percentage received by each payee, or the manner in which the percentage is calculated, the duration of the order and the plan to which it applies.

A QDRO should be drafted as part of the divorce negotiations. Ideally, the court should be in a position to certify the QDRO at the same time it enters the divorce decree. If the worker-spouse dies or retires before the plan administrator approves the QDRO, the alternate payee may have trouble collecting her share of the pension.

IRAs are not considered qualified plans, and the former spouse may divide them, in whole or in part, without a QDRO. However, care must be taken because the division must be trustee-to-trustee to avoid any tax penalties. An IRA can be divided by the spouses under a court order or as part of a divorce judgment.