Answers To Common QDRO Questions
We know you have questions about how the process works for dividing retirement and pension assets. Here are five frequently asked questions and answers.
Who is responsible for filing a qualified domestic relations order (QDRO)?
Typically, your divorce attorney will refer you to another attorney to prepare your QDRO. It is more complicated than dividing a savings or checking account or even an IRA because the money in a 401(k) or pension is pretax. When dividing this asset, it is in your best interest to avoid any tax issues by dividing it in a QDRO.
Can a QDRO happen after divorce?
A QDRO is typically prepared after a divorce after your divorce decree is final. After the judge signs the order, it goes to the 401(k) or pension administrator to be divided.
How does payout happen when a QDRO is involved?
When a QDRO involves a 401K, the company that processes the order will put the funds in a separate account. If the recipient of the funds wants cash, this will be taxed as additional income because tax was not paid on it before.
If the asset is a pension, the recipient will have to have to wait until the participate retires to receive the funds.
Do you have to pay taxes on a retirement account?
There are no taxes or penalties on the division of the 401K retirement account as long as you places the funds in a similar type of account, such as an IRA.
Why do I need an attorney for a QDRO?
The process is complex. Not all divorce attorneys have the skill, education and experience needed to handle Arizona QDROs. Always work with an attorney who has this special know-how if you are dividing a pension, 401(k), 403(b) or retirement asset.
Contact Us For Answers To Your QDRO Questions
At The Law Firm of Jessica M. Cotter P.L.L.C., we understand how confusing dividing marital financial assets can be. Let us make it simple for you. We have helped hundreds of clients in Peoria and throughout Arizona understand their rights and obligations when it comes to pension and retirement fund division. Call 602-842-0450 or send us a confidential website connect email, and we will be in touch.