The beauty of a QDRO is that dividing retirement assets wouldn’t have to incur any income tax penalty. It allows separating couples to divide their asset without having to worry about losing some to taxes. To do this, couples want to file a QDRO and have it signed by the judge and approved by the plan administrator.
However, there are cases where a QDRO can be filed, and then, there is a change of mind. What happens then? Is it impossible to reverse a QDRO if it has been received and approved? The only logical way to go about this is to have the court issue an amendment to the original QDRO.
But it isn’t as easy as it seems. The original QDRO can be amended but is nearly impossible to reverse. The only way forward is if the court and the plan administrator agree that the QDRO is against your divorce agreement.
If that is the case, you and your spouse will have to re-negotiate to get the QDRO amended.
QDRO mistakes to avoid
- Misunderstanding the plan type
When it comes to QDRO, there isn’t a one-size-fits-all, as there are other types of QDRO such as contribution plans, benefit plans, or a hybrid type of plan. They are vastly different and have their specific purposes.
It is vital to know the type of QDRO plan to divide, as this will save you from delays and additional expenses that come with modifying a QDRO.
- Not using the correct name of the plan
After determining the type of plan, it is also important to know the name of the plan. Without the actual name of the plan, you might encounter a case where you only want the pension plan to be divided, while the other party says, “no, no no, retirement plan means dividing both 401K and pension”.
To avoid this scenario, get a statement and summary plan description (SPD) for each plan. You can also take an extra measure by contacting former employers to disclose plans not known by the parties.
Furthermore, recover the contact details of the person that will implement the QDRO for the company, which may or may not be the plan administrator.
- Failing to work with a QDRO attorney
In an attempt to save cost, most divorcing couples overlook working with an experienced attorney, which ends up hurting them in the long run. In the end, they spend more than they normally should. To not find yourself in this ugly rut, get in touch with us as soon as possible.
Our job is to protect your best interest while helping you move on from this unpleasant process as soon as possible. Get in touch by giving us a call, or feel free to fill our contact form.
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