You’ve gotten divorce and have been awarded a percentage of your spouse’s retirement account, you’re good for now, right? Wrong. Often couples come to us years after their divorce to finally collect on their marital award. They want to file their Qualified Domestic Relations Order (QDRO) and collect but they’re realizing it may be easier said than done. Now what? On this week’s #FamilyFriday article, the attorneys of ERA Law Group, LLC discuss QDROs.
A Qualified Domestic Relations Order (QDRO) is the means by which a retirement asset is transferred from one spouse to another in accordance with a Judgment of Absolute Divorce. Most retirement assets have their own QDRO formats that need to be followed with the appropriate language and awards per the Judgement of Absolute Divorce. The spouse receiving the income is referred to as the “alternate payee” and often are filing the QDRO in order to provide support payments or to divide retirement assets at the time of the divorce. In most cases the assets received by the alternate payee are rolled over into another retirement account (thereby avoiding a tax penalty). The alternate payee always has the option of receiving a lump sum, however, this will trigger various tax penalties.
Individuals often don’t think about obtaining and filing their QDRO until it’s time to collect and sometimes that’s years down the road. What many individuals don’t know is that a QDRO can be filed in order to assign any future or current retirement benefits. Therefore, it doesn’t matter if your ex-spouse isn’t set to retire for an additional 30 years. You can go ahead and file that QDRO today.
The timing of preparing, filing, and the entry of a QDRO are important and various factors and consequences should be considered. Additionally, the language and options of receiving the benefits of your portion of your ex-spouses retirement assets are also important when drafting a QDRO. If you’ve been awarded a percentage of your spouse’s retirement asset, call the attorneys at ERA Law Group, LLC at (410) 919-1790 today and ask about their fixed fee services!