DOL Could Better Inform Divorcing Parties About Dividing Savings

Although more than one-third of adults aged 50 or older have experienced
divorce, few people seek and obtain a Qualified Domestic Relations Order
(QDRO), according to large plan sponsors GAO surveyed. A QDRO establishes
the right of an alternate payee, such as a former spouse, to receive all or a
portion of the benefits payable to a participant under a retirement plan upon
separation or divorce. There are no nationally representative data on the number
of QDROs, but plans and record keepers GAO interviewed and surveyed
reported that few seek and obtain QDROs. For example, the Pension Benefit
Guaranty Corporation administered retirement benefits to about 1.6 million
participants, and approved about 16,000 QDROs in the last 10 years. GAO’s
analysis of other survey data found about one-third of those who experienced a
divorce from 2008 to 2016 and reported their former spouse had a retirement
plan also reported losing a claim to that spouse’s benefits. Many experts stated
that some people—especially those with lower incomes—face challenges to
successfully navigating the process for obtaining a QDRO, including complexity
and cost.
Individuals seeking a QDRO may be charged fees for preparation and review of
draft orders before they are qualified as QDROs and, according to experts GAO
interviewed, these fees vary widely. These experts cited concerns about QDRO
review fees that they said in some cases were more than twice the amount of
typical fees, and said they may discourage some from pursuing QDROs.
Department of Labor (DOL) officials said the agency generally does not collect
information on QDRO fees. Exploring ways to collect and analyze information
from plans on fees could help DOL ensure costs are reasonable.