Do I need a QDRO when getting divorced?

Are you and your spouse planning to get divorced in Georgia soon? Are you perhaps in the midst of a divorce? If so, you should learn what a Qualified Domestic Relations Order is and when you might actually benefit from using one in your divorce.

As explained by the U.S. Department of Labor, a primary reason to use a QDRO is to legally and effectively split one spouse’s retirement account between both spouses. This may happen as part of your property division settlement. The QDRO may be used for the division of specific plans as per the Employee Retirement Income Security Act of 1974 and the Internal Revenue Service Revenue Code of 1986. A company-sponsored 401(K) is one type of account commonly split that would utilize a QDRO.

A Qualified Domestic Relations Order allows you to establish the non-account-owning spouse as a qualified payee on the account. This then allows money from the account to be transferred to that spouse per the divorce decree. If the funds are invested into another approved retirement account, there may be no need to pay early withdrawal fees or penalties on the distribution. Typically distributions taken for reasons other than retirement may be subject to these penalties or fees.

It is also important for you to know that a QDRO may be used if you want to pay child support or spousal support using money from your 401(K). Your former spouse or child can be setup as the alternate payee in these cases. Money can be transferred on a one-time basis or in regular installments.

 

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