Vanguard QDRO

Vanguard's divorce article says: "A qualified domestic relations order (QDRO) is used to divide specific types of retirement plans, including 401(k), 401(b), 403(b), and 457(b) plans and certain types of pension plans." (The "401(b)" is in Vanguard's original.) It also says: "How a QDRO payout is distributed depends on the retirement plan's policy."

That last sentence is the important one. The plan's policy, written in its QDRO procedures, decides what the order can say and how the alternate payee's share is paid. Two plans at Vanguard can have different rules.

Vanguard's divorce article says: "Individual retirement accounts (IRAs) aren't covered under QDROs." Vanguard's IRA custodial agreement, Section 5.1, sets out how an IRA moves in a divorce:

"All or any portion of the Investor's interest in the Account may be transferred to a former spouse pursuant to a divorce decree or written instrument incident to divorce as provided in Section 408(d)(6) of the Code, in which event the transferred portion of the Account shall be held as a separate individual retirement account for the benefit of such spouse"

So the document that moves a Vanguard IRA is the divorce decree or a written instrument incident to divorce. For how IRA division works in general, see the IRA divorce guide.

The Vanguard sources reviewed for this page do not give a model QDRO, QDRO procedures, mailing address, fee or review time. Those details belong to each plan. Plans covered by the federal QDRO rules must have written QDRO procedures (DOL QDRO booklet, Q 2-3), so the direct route is to ask the plan administrator, named in the Summary Plan Description, for the QDRO procedures and any model order.

Vanguard also does not handle every plan's records itself. Its page on small and midsize plan recordkeeping says Vanguard "has entered into an agreement with Ascensus, Inc., to provide certain plan recordkeeping and administrative services on its behalf." The participant's statement and the plan's procedures show who handles that plan's QDROs.

• Is the account a workplace plan or an IRA? The answer decides whether you need a QDRO at all.
• The plan's exact legal name, from the Summary Plan Description.
• The plan's current QDRO procedures and model order, if it has one.
• Whether the plan reviews drafts before the judge signs.
• That each choice in the order matches the settlement: the amount or percentage, the date, gains and losses, and loans. See sample QDRO language.

For a workplace plan, we get the plan's QDRO procedures, check them against the settlement agreement, and draft the QDRO for that plan, with pre-approval where the plan offers it. For a Vanguard IRA, we prepare the transfer order under Section 408(d)(6). Standard QDRO preparation and IRA transfer orders are $700 each. See the pricing page. If you are drafting it yourself, the do it yourself QDRO guide walks through the steps.