Do I need a qualified domestic relations order?

On behalf of Johnson, Sclafani & Moriarty, Attorneys at Law posted in High Asset Divorce on Friday, February 5, 2016.

If you are in the midst of a divorce that includes a property settlement, your attorney may have mentioned the term QDRO. The acronym stands for “Qualified Domestic Relations Order,” and it is a judgment that becomes final during the division of marital property.

However, a QDRO doesn’t deal with the division of household goods, cars or real estate. This legal decree distributes portions of one spouse’s retirement benefits to his or her former spouse. A QDRO has to be drawn up with specificity and include the following information:

— The percentage or total amount of the employee’s benefits that will be paid out to the alternate payee

— The name of the employee, the alternate payee and the mailing address of both.

In some cases, it is not the participant’s ex-spouse who is awarded a percentage of the retirement benefits. A QDRO can be drawn up that pays benefits to the children of the participating employee or other dependents. However, QDROs cannot provide benefits that are unavailable through the participant’s plan.

A formula is used to determine the benefit amount that the ex-spouse or other payee will receive. In cases where the participant’s children or other dependents receive benefits, the participant is responsible for the taxes on them.

No doubt,QDROs can be complex, and because they become court orders, it is vital to cross every “t” and dot every “i.” In cases of complex asset division, it is advisable to retain a family law attorney who is well-versed in Massachusetts laws regarding the division of marital assets in a high – divorce.

Source: Internal Revenue Service, “Retirement Topics – QDRO – Qualified Domestic Relations Order,” accessed Feb. 05, 2016