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”—usually takes 10 – 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. Once we send out a preliminary determination letter that the order is a QDRO, there’s a 30-day period to submit written objections. However, the parties can agree to waive that 30-day period on the Plan’s waiver form.  Contact us and we’ll send you the form.

Yes.  The fee is $250 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 $250 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.

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 Tax Code.

The Plan has detailed QDRO Procedures.  You can also contact us if you have other questions.

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).  You can send us an email (be sure we’ve sent you a confirmation of receipt) or write to us at: [address].

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
We’ll review the order to see if it meets the requirements of a QDRO. This usually takes 4 weeks, but can take longer.  We’ll make a preliminary determination of whether the order is a QDRO and send a letter to the parties giving them 30 days to object.  If no objection is received within 30 days, the preliminary determination 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, the funds awarded in the order will be transferred to a Plan account for the Alternate Payee. This process—called “segregation”—usually takes 2 weeks.

Yes. Once we send out a preliminary determination letter that the order is a QDRO, there’s a 30-day period to submit written objections. However, the parties can agree to waive that 30-day period on the Plan’s waiver form.  Contact us and we’ll send you the form.

Yes.  The Plan charges $250 to process a domestic relations order.  There is no additional charge for the Plan to review a final order that is exactly the same as the Plan’s sample order.  However, if you would like the Plan to review a draft order or if you submit a final order that is different from the Plan’s sample, then in addition to the $250 fee the Plan will also charge its attorney’s fees and costs to review and process the order.  The Plan also passes through its attorney’s fees and costs related to your QDRO determination, such as responding to inquiries about the order and evaluating any objections to a QDRO determination.

No.  The Plan 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.

Unless the order is for child support, the funds must first be transferred into a Plan account in your name.  Once transferred, you can take a distribution at any time or rollover the funds into another plan or IRA.

The Plan has detailed QDRO Procedures which control this process.  You can also contact us if you have other questions.