Undergoing divorce is primarily unpredictable and could catch divorce victims unexpectedly. More so, if you didn’t have specific plans put in place for such situations. A QDRO could be necessary during a divorce!

What you should know about a Qualified Domestic Relations Order (QDRO)

A qualified domestic relations order is a court decree or order that allocates a percentage of a retirement plan to a spouse or dependent in cases where a divorce occurs.

Certain measures like prenuptial agreements are put in place in the case of a divorce. However, these agreements don’t include splitting retirement plans, so you need a qualified domestic relations order during divorce (QDRO).

Do you need a QDRO during your divorce?

Qualified Domestic Relations Orders are legal decrees made by the state’s court that allows spouses to split their assets in the event of a divorce. A person who saves or earned the benefit is the participant in a QDRO, while the other spouse is referred to as the “alternate payee.”

The employment retirement act serves a detailed level of protection to participants. According to this act, a participant cannot split their retirement plan stake to someone else. The most qualified plans will not subject ex-spouses to payments unless they tender a QDRO for this purpose.

Some Benefits of QDRO

    1. Enjoy benefits after the death of a participant

As an ex-spouse, child, or dependents of the participant, you aren’t just worthy of the participant’s retirement benefits when they are alive. You are also subjected to a survival fund in cases where the participant dies.

    2. Benefits subject to taxes after distribution

As a participant, it may seem you’ve got everything to lose and the alternate payee everything to gain, but that isn’t the case with a QDRO. Retirement benefits are subjected to taxes, but you won’t have to be tied to it once you’ve got a QDRO in place as all benefited funds by the alternate payee are treated as income and, as such, taxable.

    3. The Early Withdrawal Penalty

In cases where you withdraw from a retirement plan before reaching the age of 591/2, the federal law imposes a 10% penalty. This law speaks differently when a QDRO is in place, as you won’t be penalized for transferring the benefits to an ex-spouse on such accounts.

Working With A Divorce Attorney

We understand the emotional stress that comes with dealing with a divorce. However, having a qualified domestic relations order put in place should offer you a nesting plan should things go south.

If you ever need a QDRO, we’ve got you covered! Our expert attorneys are always ready to offer the best post-divorce assistance in proceeding with such cases. Feel free to call us at any time or fill our contact form.