Learn More
Here are a few frequently asked questions. Have a question that’s not answered below? Contact us.
Learn More
Here are a few frequently asked questions. Have a question that’s not answered below? Contact us.
QDRO stands for Qualified Domestic Relations Order. This is an order signed by the court that directs the Costco 401(k) Retirement Plan (the “Plan”) to pay a portion of an employee’s Plan account to someone else. The employee is called the Participant and the person the Plan is paying is called the Alternate Payee. The Alternate Payee must be a spouse, former spouse, child, or other dependent of the Participant.
The domestic relations laws (including community property laws) in the state where you reside determine how much of a Participant’s Plan account will be paid to an Alternate Payee. This amount is included in the final QDRO filed with the court and is usually expressed as a dollar amount or a percentage of the Participant’s account on a certain date. The Plan’s procedures determine whether and how Plan accounts are divided.
Step 1 – Contact us
Let us know you’ll be getting a QDRO. We’ll place a hold on the Participant’s Plan account that prevents distributions (other than stock dividends).
Step 2 – Draft a domestic relations order
- Option A: Complete the Plan’s sample order
Click here to download the Plan’s sample order. - Option B: Draft your own order
If you don’t want to use the Plan’s sample and would like to be sure that your order will be approved by the Plan, you can submit your draft to the Plan for review. The Participant must complete the Plan’s authorization form before the draft order can be reviewed.
Step 3 – Submit the order to the court
Present the order to the court.
Step 4 – Submit the order to the Plan
Once the court approves and signs the order, send us a copy. Make sure the order has a stamp showing it’s been filed with the court.
Step 5 – We’ll review the order
The order will be reviewed to see if it meets the requirements of a QDRO. This usually takes 4 weeks, but can take longer. A preliminary determination will be made on whether the order is a QDRO and a letter will be sent to the parties giving them 30 days to object. If no objection is received within 30 days, the preliminary determination generally will become final. Objections must be made in writing.
Step 6 – Benefits will be transferred
If there is a final determination that the order is a QDRO (and after the 30 days are up), the funds awarded in the order will be transferred to a Plan account for the Alternate Payee. This process—called “segregation”—can take up to 30 business days.
If you have an objection, you must notify us in writing of your objection. Click here for our mailing address and fax number.
The most common reason an order is not approved by the Plan is the order doesn’t clearly instruct the Plan how much to pay the Alternate Payee. For example:
- More than one formula in Paragraph 9 of the Plan’s sample order has been checked.
- The valuation date used to calculate the amount to pay the Alternate Payee is before January 1, 1995 (June 1, 1995 for Participants previously covered by the Costco 401(k) Plan for California Union Employees). The Plan cannot calculate balances before these dates.
- The valuation date is incomplete. For example, the order might award the Alternate Payee 50% of the Participant’s account as of January 2017 instead of January 5, 2017. Because the account is valued every day the New York Stock Exchange is open, exact dates are required.
Yes. The fee is $296 to process a QDRO. There is no additional charge for a final order that is exactly the same as the Plan’s sample order. However, if you would like review of a draft order or if you submit a final order that is different from the Plan’s sample, then in addition to the $296 fee the Plan will also charge its attorney’s fees to review and process the order. The Plan also passes through other attorney’s fees and costs related to your QDRO determination, such as responding to joinders or inquiries about the order and evaluating any objections to a QDRO determination. The Participant’s and Alternate Payee’s accounts equally share fees and costs to process an order, unless the order provides a different allocation between the parties.
No. We cannot advise you on how to complete a QDRO or submit it to the court. The information on this website and other information provided to you by the Benefits Department and/or the Plan’s attorneys is not intended as legal advice and should not be relied upon. You should consult your own attorney.
If the Plan Administrator receives a court order or other legal process related to a QDRO or the Participant completes the Plan’s authorization form, then we may provide a potential Alternate Payee information about a Participant’s account balance and status—for example, what the Participant’s account balance was as of a past date and whether the Participant is fully vested. For other inquiries, typically a subpoena is required before a Participant’s account information can be shared. However, general information about the Plan is available at www.costcobenefits.com.
Unless the order involves a state agency and is for child support, funds must first be transferred into a Plan account in the Alternate Payee’s name. Once transferred, a distribution can be taken at any time. A distribution can be requested in any form available under the Plan, such as a lump sum or installment payment, or the funds can be rolled over into another qualified plan or IRA.
There are no tax implications to the Participant when funds are distributed from the Participant’s account due to a QDRO, unless the Alternate Payee is the Participant’s child or other dependent.
If the Alternate Payee is the Participant’s spouse or former spouse, the Alternate Payee will be responsible for the income taxes due on any cash withdrawn from their account. No taxes are due as long as the funds remain in the Costco 401(k) Retirement Plan or in another qualified plan, until required minimum distribution dates required by the Plan or the Tax Code.
A QDRO can never assign responsibility for a loan to an Alternate Payee—any outstanding loan remains the Participant’s obligation to repay. However, if a QDRO awards a portion of a Participant’s account as of a past date and the Participant had an outstanding loan on that date, the QDRO should address whether that loan should be taken into account when calculating the award.
For example, suppose the Participant’s total account balance on 1/1/21 was $40,000, $35,000 in investments plus a $5,000 loan which the Participant has since repaid. The parties get a QDRO that awards the Alternate Payee 50% of the Participant’s account balance as of 1/1/21. The QDRO should specify whether the Participant’s account balance on 1/1/21 ($40,000) should first be reduced by the then-outstanding loan balance ($5,000) before calculating the Alternate Payee’s 50% share. If the QDRO says the balance should be reduced for the loan, that would mean the Alternate Payee’s share as of 1/1/21 would be 50% of $35,000.
A hold is placed on a Participant’s account when we are notified in writing that a QDRO may be issued. That hold generally remains in place until we receive and process the QDRO. However, if the Participant and their spouse or former spouse change their minds and decide not to file a QDRO, please contact us for information on what the Plan requires to lift the hold.
The Plan has detailed QDRO Procedures. You can also contact us if you have other questions.
QDRO stands for Qualified Domestic Relations Order. This is an order signed by the court that directs the Costco 401(k) Retirement Plan (the “Plan”) to pay a portion of an employee’s Plan account to someone else. The employee is called the Participant and the person the Plan is paying is called the Alternate Payee. The Alternate Payee must be a spouse, former spouse, child, or other dependent of the Participant.
The domestic relations laws (including community property laws) in the state where you reside determine how much of a Participant’s Plan account will be paid to an Alternate Payee. This amount is included in the final QDRO filed with the court and is usually expressed as a dollar amount or a percentage of the Participant’s account on a certain date. The Plan’s procedures determine whether and how Plan accounts are divided.
Step 1 – Contact us
Let us know you’ll be getting a QDRO. We’ll place a hold on the Participant’s Plan account that prevents distributions (other than stock dividends).
Step 2 – Draft a domestic relations order
- Option A: Complete the Plan’s sample order
Click here to download the Plan’s sample order. - Option B: Draft your own order
If you don’t want to use the Plan’s sample and would like to be sure that your order will be approved by the Plan, you can submit your draft to the Plan for review. The Participant must complete the Plan’s authorization form before the draft order can be reviewed.
Step 3 – Submit the order to the court
Present the order to the court.
Step 4 – Submit the order to the Plan
Once the court approves and signs the order, send us a copy. Make sure the order has a stamp showing it’s been filed with the court.
Step 5 – We’ll review the order
The order will be reviewed to see if it meets the requirements of a QDRO. This usually takes 4 weeks, but can take longer. A preliminary determination will be made on whether the order is a QDRO and a letter will be sent to the parties giving them 30 days to object. If no objection is received within 30 days, the preliminary determination generally will become final. Objections must be made in writing.
Step 6 – Benefits will be transferred
If there is a final determination that the order is a QDRO (and after the 30 days are up), the funds awarded in the order will be transferred to a Plan account for the Alternate Payee. This process—called “segregation”—can take up to 30 business days.
If you have an objection, you must notify us in writing of your objection. Click here for our mailing address and fax number.
The most common reason an order is not approved by the Plan is the order doesn’t clearly instruct the Plan how much to pay the Alternate Payee. For example:
- More than one formula in Paragraph 9 of the Plan’s sample order has been checked.
- The valuation date used to calculate the amount to pay the Alternate Payee is before January 1, 1995 (June 1, 1995 for Participants previously covered by the Costco 401(k) Plan for California Union Employees). The Plan cannot calculate balances before these dates.
- The valuation date is incomplete. For example, the order might award the Alternate Payee 50% of the Participant’s account as of January 2017 instead of January 5, 2017. Because the account is valued every day the New York Stock Exchange is open, exact dates are required.
Yes. The fee is $296 to process a QDRO. There is no additional charge for a final order that is exactly the same as the Plan’s sample order. However, if you would like review of a draft order or if you submit a final order that is different from the Plan’s sample, then in addition to the $296 fee the Plan will also charge its attorney’s fees to review and process the order. The Plan also passes through other attorney’s fees and costs related to your QDRO determination, such as responding to joinders or inquiries about the order and evaluating any objections to a QDRO determination. The Participant’s and Alternate Payee’s accounts equally share fees and costs to process an order, unless the order provides a different allocation between the parties.
No. We cannot advise you on how to complete a QDRO or submit it to the court. The information on this website and other information provided to you by the Benefits Department and/or the Plan’s attorneys is not intended as legal advice and should not be relied upon. You should consult your own attorney.
If the Plan Administrator receives a court order or other legal process related to a QDRO or the Participant completes the Plan’s authorization form, then we may provide a potential Alternate Payee information about a Participant’s account balance and status—for example, what the Participant’s account balance was as of a past date and whether the Participant is fully vested. For other inquiries, typically a subpoena is required before a Participant’s account information can be shared. However, general information about the Plan is available at www.costcobenefits.com.
Unless the order involves a state agency and is for child support, funds must first be transferred into a Plan account in the Alternate Payee’s name. Once transferred, a distribution can be taken at any time. A distribution can be requested in any form available under the Plan, such as a lump sum or installment payment, or the funds can be rolled over into another qualified plan or IRA.
There are no tax implications to the Participant when funds are distributed from the Participant’s account due to a QDRO, unless the Alternate Payee is the Participant’s child or other dependent.
If the Alternate Payee is the Participant’s spouse or former spouse, the Alternate Payee will be responsible for the income taxes due on any cash withdrawn from their account. No taxes are due as long as the funds remain in the Costco 401(k) Retirement Plan or in another qualified plan, until required minimum distribution dates required by the Plan or the Tax Code.
A QDRO can never assign responsibility for a loan to an Alternate Payee—any outstanding loan remains the Participant’s obligation to repay. However, if a QDRO awards a portion of a Participant’s account as of a past date and the Participant had an outstanding loan on that date, the QDRO should address whether that loan should be taken into account when calculating the award.
For example, suppose the Participant’s total account balance on 1/1/21 was $40,000, $35,000 in investments plus a $5,000 loan which the Participant has since repaid. The parties get a QDRO that awards the Alternate Payee 50% of the Participant’s account balance as of 1/1/21. The QDRO should specify whether the Participant’s account balance on 1/1/21 ($40,000) should first be reduced by the then-outstanding loan balance ($5,000) before calculating the Alternate Payee’s 50% share. If the QDRO says the balance should be reduced for the loan, that would mean the Alternate Payee’s share as of 1/1/21 would be 50% of $35,000.
A hold is placed on a Participant’s account when we are notified in writing that a QDRO may be issued. That hold generally remains in place until we receive and process the QDRO. However, if the Participant and their spouse or former spouse change their minds and decide not to file a QDRO, please contact us for information on what the Plan requires to lift the hold.