A qualified domestic relations order (QDRO)
is a court order that designates one or more alternate payees for an individual’s retirement account. In a divorce, this generally means that the spouse who has an employer-sponsored retirement plan will have his or her plan divided to ensure that his or her spouse receives a fair share of the couple’s marital assets. A QDRO may also be used to provide alimony or child support following the couple’s divorce, depending on what the court determines to be the other spouse and their children’s needs.
Which Plans can be Divided through a QDRO?
QDROs apply only to retirement plans covered by the Employee Retirement Income Security Act of 1974 (ERISA). These include most private employer-sponsored retirement plans, such as:
Will a QDRO be Part of my Divorce Settlement?
If you or your spouse has an employer-sponsored retirement plan like one of the plans listed above, it is likely the court that handles your divorce will issue a QDRO to ensure that the retirement plan is divided fairly under the doctrine of equitable distribution. Before you begin the divorce process, discuss this with your lawyer to get a better sense of how your retirement plans may be divided and what you can do to prepare for the court to divide your assets.
When a QDRO is issued, it must include each alternate payee’s name and most recent mailing address, if known. An alternate payee may be a current or former spouse, a child, or another dependent of the individual who holds the account being divided. Basically, a QDRO acknowledges the alternate payees’ right to receive a portion of the account holder’s assets and assigns them a share of the assets. The order designates the percentage of the holder’s plan that is to go to the named alternate payees.
Once the alternate payee receives payments, he or she must report these payments as if he or she were a plan participant. The recipient may also be taxed on this income, though he or she may be able to roll some or all of it over into another account without paying taxes on the transfer.
Draper Law Office can Help you Understand Every Aspect of your Divorce
To learn more about QDROs and other parts of the divorce process, contact our team of experienced divorce lawyers at Draper Law Office today to schedule your initial consultation in our office. You can reach us online or by calling (866) 767-4711. We have three convenient Florida offices to serve you: Orlando, St. Cloud, and Kissimmee. Get in touch today to start working on your divorce with us.