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Understanding fees related to a QDRO

20673216_S.jpgMissouri residents may have heard of a qualified domestic relations order. A QDRO is what allows assets in certain retirement plans to be transferred without penalty. However, companies such as Vanguard or Fidelity may charge a QDRO fee of up to $1,200 or more. This is in addition to any fees that a lawyer may charge to prepare and process the order.

These fees have been described by some as a way for plan sponsors to enhance their profit margins. While some think that these fees are excessive, it can be difficult to prove that that they are not reasonable for keeping records. Therefore, plan sponsors are generally able to charge whatever they want with few consequences. According to a representative for the Plan Sponsor Council of America, a fee of between $500 and $1,000 is reasonable.

He says that administering QDROs are complex as they fall under the Employee Retirement Income Security Act of 1974. He further claimed that divorce lawyers tend to dislike them because they don't know how much time it takes to handle them properly. Ultimately, he concluded that they may not be a money maker for the larger plan sponsors. In some cases, an attorney may not even know about the fee, which may upset an individual who is already paying thousands in legal fees.

The end of a marriage can be an emotional time for an individual. Therefore, it may make sense to talk with an attorney who may be able to review the case from an objective point of view and handle a QDRO or other matters in a timely manner while keeping costs as affordable as possible.

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