The Benefits of a Qualified Domestic Relations Order

December 13, 2012

Dealing with the aftermath of a marriage dissolving can be emotionally draining --especially when two exes are battling each other over money and assets. In some cases, making payments to an ex-spouse can be taxing, but there is one tool available that can make it easier.

What is a Qualified Domestic Relations Order?

A Qualified Domestic Relations Order, or QRDO, can be established as a way to pay your ex-spouse support payments, or divide marital assets, by transferring all or part of the funds in your pension plan to your ex. These arrangements can be made from retirement accounts including 401(k)s, 403(b)s, Keoghs or IRAs.

A QRDO can be a convenient way of making payments to your ex, and as long as the payments are made directly to your ex's qualified retirement plans, you don't have to worry about penalties and taxes for making these transfers.

In order to set up a QRDO arrangement, you must file paperwork that includes the following information:
- Your ex's full name
- Your ex's mailing address
- The Social Security numbers for you and your ex
- The dollar amount that you want your ex to be paid
- The number of payments that your ex should receive in a certain time period
- Details about the retirement accounts that the QRDO applies to

In addition to making payments to an ex-spouse, QRDO may also be set up to make payments to your children or other beneficiaries.

Although this process may sound daunting, keep in mind that in order to alleviate your tax responsibility when making payments to your ex through your retirement accounts, a QRDO must officially be in place. Otherwise, you are responsible for paying taxes on that money, and your ex is able to receive that payment without any tax burden.

The benefits of a Qualified Illinois Domestic Relations Order

Qualified Illinois Domestic Relations Order, or QILDRO, is the equivalent of a QRDO that is used for people who have accrued benefit accounts in the state retirement system-- such as schoolteachers, college professors and other state employees. These payments cannot be made to an ex-spouse prior to the retirement date of the state employee, and the state pension board calculates the amount of the payments made depending on how much money has accrued in the account over the course of the state employee's career.

Do you need legal help?

Financial matters related to a divorce can be complicated. If you need help in this area, it's best to have an experienced advocate on your side. Contact a qualified family law attorney who can advise you of what options you have in terms of giving or receiving money from your ex.

Article provided by Schlesinger & Strauss
Visit us at www.illinois-family-lawyer.com