I have written about QDRO’s aka Qualified Domestic Relations Order’s many times in the past, but I found a good article that talks about the exorbitant fees pension plans are charging their customers when processing them.
Companies charge as much as $2,000 per QDRO. Our fee to prepare your QDRO is one of the lowest out there. Click here for more information about our QDRO service.
You see, if you have a pension, 401k or other “defined contribution plan” and you need to split the plan as part of your divorce, you will need to have a QDRO prepared.
We handle the QDRO preparation, however as stated, the Plan’s themselves will usually charge a fee as well.
Below is a quote from an article on the Bloomberg website.
But when a third party such as Fidelity Investments or Vanguard Group handles the administrative and record-keeping details of a 401(k) plan, the QDRO fee charged to participants can start around $300, jump quickly to about $700, and stretch to $1,200 and beyond. That’s on top of what you’re paying the lawyer who prepared the form for the plan to approve and process.
One way record keepers can “enhance profit margins, while remaining competitive on record-keeping charges, is to charge bloated transaction fees to participants,” said Carl Engstrom, an attorney with Nichols Kaster, which has filed excessive-fee lawsuits against plan sponsors, the companies offering the 401(k) to employees. “While QDRO processing fees may seem like an oddball or niche issue, this problem raises issues that echo many of the same themes that we keep hearing in recent 401(k) litigation.”
Plan sponsors can wind up in the legal cross-hairs for allegedly breaching a fiduciary duty by not negotiating for lower fees. The litigation has focused mostly on investment fees and overall record-keeping costs, not on items like QDRO fees.
QDROs are “like a cash-printing machine for plan administrators,” said Emily McBurney, an Atlanta-based lawyer who has specialized in QDROs for 16 years. Plans can essentially charge whatever they want, she said, and “no one can go up against the big record-keepers to say that the amount is not reasonable, so people are trapped.”
So on top of the cost of divorce, you will also have the costs of the QDRO preparation as well as whatever administrative fee the plan charges.
