QDRO preparation is a necessity to divide and distribute pension plans, 401k type accounts including 403b and 457 plans and other similar employer deferred compensation plans. IRA's and Annuities do not typically need a QDRO but will still need a DRO (a court order that has not been reviewed by the financial institution).
The short basic background info is that a couple is divorcing and one or both spouses have been accumulating benefits in a pension plan or an employer offered deferred compensation plan (401k or similar). Leaving aside all issues regarding the value of the account(s) and the portion that is marital vs separate property (earned before the marriage vs earned during the marriage) without the proper preparation and qualification of the distribution order (QDRO) there will be no money paid to the non-titled spouse. The titled spouse is the one that is working and earning the benefits.
Over the years I have had many new clients come in my office 10 years after they were divorced and they state: "my ex has retired and I am suppose to be getting money but I am not receiving anything and I sent the company a copy of my divorce decree and they told me I need a QDRO". Or perhaps they say the employer was taken over by a new company and nobody there knows what I am talking about or they can't find any records. Or the ex retired five years ago and says the money was spent.
It can be a nightmare to have a QDRO prepared years and years after the divorce was made final. There often is a lack of cooperation from the ex who may even try to renegotiate or has convenient amnesia. It is so much easier to have the proper QDRO prepared at or near the time of divorce than years later. The attorneys who handled the divorce will know what needs to be done without a "fight". The spouses understand why there is going to be a sharing of some part of the monies either now or in the future at the time of retirement. The company is still in business. If a new plan administrator exists they will have received the prior "qualified" orders and there will be no mystery as to what happened.
Trying to untangle the mess of payments not received, monies spent, companies not maintaining records, ex's that are perhaps uncooperative will undoubtedly be more expensive down the road and there is no guarantee that there will be full recovery of monies already paid out or survivor benefits not being protected.
QDROS will often state the procedure to determine not only the benefit calculation but also the right of survivorship so that if the working spouse dies before or after retirement the rights of the former spouse are protected.
I urge anyone whose divorce involves the distribution of retirement accounts to have the QDRO(s) prepared at or near the time of the divorce decree. The more time that passes the less likely it will be handled properly and completely.