Written by Jonathan Breeden
If you are going through a legal separation and divorce, a QDRO can help you and your former spouse properly divide your assets while also limiting needless hassle and tax liability in many cases. Short for “Qualified Domestic Relations Order,” a QDRO is an order that the judge in your divorce case signs to address how a qualified retirement plan account or a pension should be divided between both parties. This is almost always considered a consenting order, meaning that both parties are agreeing to it, and it directs the plan administrator to make a payment to the other spouse. This payment will then be deposited into their own retirement account.
For those going through a divorce, it’s very common to feel overwhelmed by the complex task of separating assets. In addition to wanting your fair share, you also want to avoid any needless tax liabilities or other penalties. An experienced North Carolina divorce lawyer can help you by drafting a QDRO that is ideal for your situation.
Contact Breeden Law Office today. Call us at (919) 661-4970.
If a pension or retirement plan that is in either spouse’s name will be divided as part of a divorce settlement, a QDRO should be considered as early as possible. With a judge’s signature, it is established that the plan’s funds will remain as retirement savings, but now will be used for two individuals, instead of one person or a married couple.
One of the most compelling reasons for you to consider a QDRO is that it can shield you from a large tax liability. Pensions and retirement plans are protected from many tax consequences, but if your divorce settlement includes receiving money recovered from a retirement plan, it may be considered taxable income. This taxable income could be billed to you, or it could be billed to your former spouse. If it is, indeed, sent to your ex, it means that there is less money to be divided between the two of you.
Additionally, if money has to be removed from a retirement account early in order to help finance a divorce settlement, there will likely be a fee added. In many cases, a QDRO can help prevent such a fee since it is an order done in accordance with the division of assets in your divorce.
Obtaining a QDRO for a divorce can be complicated since the assets and needs of the parties in each divorce are unique. Retirement and pension plans vary greatly. Your court order has to be written to properly give you what is fair, while also preventing any unnecessary tax burden. In addition to the contact information for your plan’s administrator, your lawyer will need to make sure that the terms of your divorce are prepared before drafting this order for a judge to sign.
Your QDRO must be specifically laid out for your case. Breeden Law Office has experience preparing these orders for our clients with many different plans, including:
If you are in the process of seeking a divorce, it is important to consider how you can protect yourself and your assets. A QDRO may be ideal for your situation, and it will be much easier to arrange and implement the sooner you and your lawyer discuss it. Our office has helped many families as they seek to finalize their divorces, and we have years of experience helping families protect their assets.
To speak with an experienced North Carolina family lawyer about a QDRO in your divorce, contact Breeden Law Office as soon as possible. Call attorney Jonathan Breeden at (919) 661-4970.