Palmer Rodak & Associates
Palmer Rodak & Associates
Certified Family Law Specialists State Bar of California Board of Legal SpecializationServing your Community for 19 Years
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How does a QDRO work?

If you are getting divorced in California and believe that you and your spouse may have to split one or more 401K accounts as part of your marital division award, you should learn about the qualified domestic relations order.As you may know, you are generally restricted from taking money out of your retirement account unless it is for retirement purposes. If you take money out for other reasons, you may need to pay taxes and special fees or penalties.

However, if you need to give money from your 401K to your spouse as part of your divorce decree, a QDRO may help you avoid those taxes, fees or penalties. The U.S. Department of Labor explains that with a qualified domestic relations order, your former spouse can be legally named as an alternate payee on your retirement account and therefore eligible to receive distributions from the account per your divorce agreement.

When you use a QDRO and money is therefore distributed to your former spouse, he or she will assume tax liability. However, by reinvesting the money received into a new qualifying retirement account, the taxes will remain deferred as they would have by remaining in the original account.

A QDRO may also allow you to use retirement funds to pay child support or spousal support. If payments are made to a child or dependent, you may be liable for any taxes. This information is not intended to provide legal advice but is instead meant to give divorcing California spouses an overview of the qualified domestic relations order and how it may be useful to them.

 

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Palmer Rodak & Associates
Certified Family Law Specialists State Bar of California Board of Legal Specialization

Del Mar Office
445 Marine View Ave Ste 300
Del Mar, CA 92014

Phone: 858-356-4568
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