Why do I need a QDRO for my Pension Funds?

Why do I need a QDRO for my Pension Funds?

Why do I need a QDRO for my Pension Funds?

A Qualified Domestic Relations Order (QDRO) is a court order that needs to be included in a divorce settlement if pension funds are involved in the settlement. If an ex-spouse will received a portion of your qualified plan account balance or benefit payment, a QDRO is needed to establish the legal right. The QDRO officially establishes authority over the entitlement of ownership, including related income taxes when the funds are received. The QDRO is the legal document that that effectively makes an ex-spouse a co-beneficiary of the existing pension or qualified retirement plan.

If in the divorce settlement, retirement funds, pension funds or 401K accounts will not be divided between ex-spouses, then a Qualified Domestic Relations Order is not needed. However, if any portion will be split or will change ownership as part of the divorce settlement, a QDRO will be required.

A QDRO will also permit your ex-spouse to withdraw their defined portion, per terms of the policy and convert those funds into their own IRA. This allows an ex-spouse to take funds from the original plan and move them into an account they manage, while continuing to postpone taxes until funds are withdrawn for disbursement.

If you assigning part your qualified retirement account to an ex-spouse, without a QDRO, the withdrawals will be treated as a taxable distribution to you. You will pay the taxes for money that is withdrawn by your ex-spouse.

A Qualified Domestic Relations Order is a complex legal device that accomplished the division of retirement assets in a divorce. Not every Family Law lawyer does QDRO work. Most Attorneys who do QDRO work have Family Law experience and Tax and Estate Planning experience. Attorney Search Network can help if you need an Attorney to do QDRO work but are already working with a divorce lawyer. If you are looking for a Divorce lawyer and want one with QDRO experience contact Attorney Search Network and request Lawyer Referral from Attorney Search Network.

If you have any questions about the information provided above, please contact Attorney Search Network.

Contact Attorney Search Network for a Lawyer Referral to an attorney in your local area.

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