Whether drafting a QDRO for a participant is the practice of law is a state law issue.
Generally, if you do so for an attorney that represents the participant you are ok since the attorney is the one practicing law and he/she is responsible for the terms of the DRO and whether it is in the best interest of his/her client, as well as the DRO's filing with the state court and obtaining the court's approval making it a QDRO.
If you draft the QDRO and provide it directly to the participant, then expect to be held as practicing law in the state where the participant is located and is to file the QDRO. Also, expect to be held to the same quality and ethical standards as an attorney in the applicable state.
It will be a state court that makes the determination of whether you were practicing law and whether you met the quality and ethical requirements of an attorney in that state. This is a state law issue of legal representation, not a Federal tax or ERISA law issue.
Can you do it. Of course you can. However, if you do, your main concern should not be whether you were allowed to under state law (unauthorized practice of law) but whether your service met the state law quality and ethical requirements that apply to attorneys. Your "client", the participant, can sue you in state court for malpractice of law or for ethics violations and seek damages.
Also, states generally do not allow persons practicing law, whether authorized or not, to hide behind fin print language saying your are not practicing or to have an attorney review the QDRO you drafted.
Do you really want to practice law? This is a family law setting where the QDRO is to be filed with a state court. Ethics issues abound in family law settings and the participant and his/her spouse are not very happy with each other. Do you really want to step into the middle of this.
I am an attorney who has practiced almost 100% of my time working on retirement plans. I will not draft a QDRO directly for a participant, but will only do so for a family law attorney that represents the participant.
When you draft a QDRO you are drafting a court order on behalf of a participant whose interests are likely in opposition to his/her spouse, that is the practice of law. Do so at your own risk.
Again it is the participant or his/her spouse that you need to worry about, not whether the state will take action to stop you from unauthorized practice of law.
