A QDRO Can Derail Your Retirement Plan – Retirement Plans Affected by Divorce
A QDRO is a Qualified Domestic Relations Order.
People often believe that their retirement income, pensions, and IRA’s are sacrosanct and cannot be affected by a divorce. But this is NOT the case.
The Qualified Domestic Relations Order (QDRO) can significantly affect the funds that are available for your retirement.
A QDRO (according to the IRS website) is a “judgment, decree or order for a retirement plan to pay child support, alimony or marital property rights to a spouse, former spouse, child or other dependent of a participant.”
When such a judgment is instituted, the plan, under certain circumstances, will pay out funds that the judgment decrees.
The QDRO can be a complicated application and it is advisable to have an attorney review the information prior to submission. It is beyond the scope of this article to detail all aspects of the QDRO in individual circumstances.
A divorce can significantly affect the funds that you THOUGHT you would have available for a comfortable retirement. A QDRO has the potential to assign the right to receive some or all of the benefits of a retirement plan to someone else (usually a former spouse.)
In addition, the QDRO is detailed and specific as to how the retirement plan can be divided.
Plans such as 401K plans and defined benefit plans can be affected and have potential long term implications for the participant.
A QDRO is a legal, binding and detailed document that can adversely affect retirement planning. If a person is a public sector employee (or part of the military) the situation is more complex and best handled by an attorney who has specific knowledge of QDROs.
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