Exploring Civil Case Proceedings

Exploring Civil Case Proceedings

QDRO: What It Means To Your Divorce

by Becky Freeman

With the divorce process leading to so much stress and confusion, it can be easy to focus attention on the big issues like child custody and the division of property and debt. You shouldn't let this focus allow you to neglect a potentially valuable perk of divorce, the QDRO. The Qualified Domestic Relations Order (QDRO) allows divorcing spouses some special privileges in regards to retirement plans, so read on to learn more.

The QDRO and you 

The money that your spouse has been squirreling away in certain types of retirement accounts, such as a 401(K), is considered marital property just like the family home and car, and as such, it comes into play when it comes to divorce. In most instances, taking money from these types of accounts can incur some punishing penalty fees. With a QDRO, however, you are permitted to withdraw some (or all) of that money as part of the divorce process and no penalty fees will be charged for the withdrawal. Any funds deposited from the date of the marriage onward, regardless of who put the money into the account, is considered marital property and is subject to the provisions of a QDRO.

The Timing

Some divorce-related issues can wait, but a QDRO is not one of them. This document must be completed, signed by the judge, and submitted to the retirement plan administrator before your divorce is final. One of the main reasons for this need concerns how the division of marital property is related to the QDRO. For example, one party may elect to take the bulk of the investment account monies through a QDRO and the other party then might agree to take another equitable amount of property, such as the family home. In other words, the QDRO is an integral part of the divorce agreement itself.

Tax Issues

The ability to use a QDRO for cash has it's limits, since the monies are considered income for the receiving party. These funds are meant to be used for the recipient's own retirement fund, so "rolling" the funds over before tax time is the only way to avoid paying the tax penalty on the funds.

For the spouse in the marriage that focused on staying home from a job to raise children, the QDRO presents an opportunity to achieve a degree of equity for a more secure future. Make sure that you don't miss out on the chance to use a QDRO during your divorce. Speak to your divorce attorney for more information.


About Me

Exploring Civil Case Proceedings

Hello and welcome, I'm Winfred Paulo. I have a passion for civil court cases of all kinds. Some time back, I ended up in the thick of a civil case after a lengthy dispute with my neighbor. The dispute went on for years and ended badly with an incident that landed us both in court. We had to prove our side of the case in an effort to obtain a positive outcome and recoup our losses. Unfortunately, I lost the case due to a lack of evidence. Since then, I've maintain a strong interest in civil cases and their proceedings. I will share information about civil cases on this site to help others understand these proceedings better. I may talk about legal terms, and expected outcomes for each case type. I hope you visit often to learn more. Thanks for stopping by my website.