Qualified Domestic Relations Order (QDRO)
You may have heard the phrase "I get half of his/her retirement" in the divorce. This is one issue to be determined and listed in the final decree and it may or may not be half. Regardless, it doesn't come in the form of a check. State and federal laws require an order from the court with specific language to create a new payee account for the receiving spouse and transfer the funds from the paying spouse's account. The transfer does not trigger the common penalty for early withdraw (thank you IRS code). The receiving spouse can keep the funds in the account and use as future retirement or withdraw funds (some or all) which will be treated as income by the IRS.
No appointment is necessary to get a QDRO drafted, but some patience is necessary. The document needs to move through several hands and it is not the same process with each investment or pension company.
- Recent statement of the investment or pension account
- Case number for your divorce (4 letters and 6 numbers)
Pay fee of $400 per QDRO.