A qualified domestic relations order is necessary in Muskogee. Often called a QDRO, these orders are helpful in divorces and can be used to allocate retirement benefits to a spouse. It is a court order and reflects the settlement agreement dividing property upon divorce.
The order tells the retirement account or benefits administrator of a pension plan or other retirement vehicle that a particular portion of retirement benefits will now belong to the other spouse as part of the divorce settlement. This is one way to ensure a spouse can obtain retirement benefits upon divorce. This can be particularly important where one spouse works and the other stays home with the children.
Here is a typical scenario: A husband works at a job which withdraws a certain amount each paycheck and deposits it into a pension fund. The wife stays home with the children. After the children begin school, the wife returns to working part-time, but her job does not offer pension benefits to part-time employees. Both spouses work hard to pay the mortgage and other bills.
The couple decides to divorce after 15 years. As part of the settlement agreement, the pension benefits are split in half, with each spouse taking half of the amount in the pension fund at that point in time.
Normally, retirement benefits are not assignable during the beneficiary’s lifetime, meaning that a husband cannot assign these benefits to his wife absent a court order. The court-ordered qualified domestic relations order allows the assigning of benefits to the wife in this scenario.
QDROs are highly technical documents. Merely specifying a dollar amount in a settlement agreement is not enough for a plan administrator to assign those funds to the other spouse. Each retirement plan must comply with federal law, and each QDRO must comply with the requirements of that particular retirement plan. If not drafted and executed correctly, the results could be financially disastrous for both parties.
Qualified Domestic Relations Order Ramifications
It is important to have an experienced attorney handle the drafting and execution of this type of order. When handled correctly, spouses can benefit. But if the spouse takes the funds directly, there can be huge tax costs for doing so.
This acts as a withdrawal, triggering tax consequences. Thus, the funds must roll over into a qualified retirement plan in order to avoid penalties.
You will need an experienced Muskogee divorce attorney to help with this process. We are here to help when you need it most.
Confidential Consultation: Muskogee Divorce Attorney
If you’re considering all of your options at the moment and need to know how best to handle the issues you will face, call an experienced Muskogee divorce attorney today at (918) 913-0725, or toll-free at 1 (888) 447-7262 (Wirth Law).
If you prefer, you can use the box in the upper right-hand corner of this page to send a question or message.