On behalf of Stange Law Firm, PC posted in High Asset Divorce on Wednesday, June 10, 2015.
A qualified domestic relations order, or QDRO, is a court order to divide retirement benefits in a divorce. The order gives an alternate payee, such as the spouse, child, or another dependent, the right to receive all or a portion of the benefits under a retirement plan.
In Missouri, QDROs must meet certain requirements in order to be valid and be approved by a plan administrator. Perhaps most obviously, the QDRO must contain the names and last-known mailing addresses of both the participant and the alternate payee.
Next, a QDRO should describe how the retirement assets will be divided between the plan’s participant and the alternate payee. In particular, the QDRO must specify what amount or percentage of the benefits will be paid to the alternate payee. The QDRO should also specify how the payee receives those benefits. For example, a payee may receive the benefits in a certain number of payments or over a specific time period. The benefits can be used to pay for things like child support and spousal support.
Keep in mind that dividing retirement benefits in a divorce can have tax implications. A properly drafted QDRO can help both the participant and alternate payee avoid harsh tax penalties and consequences. An alternate payee may be able to roll over all or part of the benefits that he or she receives from the QDRO tax-free.
If you are going through a divorce and considering a QDRO, you may wish to seek the advice of an experienced family law attorney. QDROs can be complicated, and the attorney can help you better understand how these orders work.
Source: IRS.gov, “Retirement Topics – QDRO – Qualified Domestic Relations Order,” Accessed June 7, 2015