Analyzing QDRO Fees: A New PSCA Study

Results show fee amounts and which parties pay

PSCA’s QDRO mini-survey investigates how companies handle QDRO fees for their 401(k) and other qualified retirement plan participants. Data from 103 plans were analyzed to investigate issues such as who pays the QDRO fees, whether QDRO fees can be split with alternate payees, the use of specialized service providers, and fee amounts. Key findings are summarized below. You may obtain the full study from PSCA’s Web site or by calling PSCA’s office at 312-419-1863.

Payer of QDRO Fees
The data indicate that companies are more likely to pay QDRO fees themselves than to charge them to plan assets; 55.3 percent of companies paid the entire fees themselves, while 43.7 percent charged the entire fee to the plan (1 percent split the fee between the company and the plan). (See Exhibit 1)

Exhibit 1: Percentage of Companies That Pay Entire QDRO Fee

QDRO Fees Paid Through Plan Assets
Among companies that charge QDRO fees to plan assets, 73.9 percent charge the fees to the account of the individual affected by the QDRO, while 26.1 percent of companies treat QDRO fees as a general plan expense and deduct fees from the assets of all plan participants. Smaller companies are more likely to charge individual participant accounts, while larger companies more often charge these fees across all plan assets. (See Exhibit 2)

Exhibit 2: Type of Participant Who Pays Fees (when fees are paid from plan assets)

Splitting of QDRO Fees With Alternate Payee
40.6 percent of plans permit individuals responsible for paying QDRO fees to split the fee with the alternate payee.

Use of Specialized Service Provider for Handling QDROs
34.3 percent of plans utilize a specialized service provider to help with their QDROs. The larger the company, the more likely they are to use a specialized provider. (See Exhibit 3)

Exhibit 3: Percent of Plans Using a Specialized Service Provider to Help With QDRO's

Median QDRO Fees
The median QDRO fee reported by respondents was $400.