Do you need a Qualified Domestic Relations Order? Has your marriage hit the rocks? In more ways than one, marriages are truly beautiful. Unfortunately, things don’t always go the way we want them to.
When this happens, you might choose to go your separate way. However, this splitting of assets can get a bit more complicated when retirement funds come into the picture. This is where a leading QDRO expert comes in.
What is a Qualified Domestic Relations Order?
A QDRO is a legal order that comes from a court or any state authority. Its purpose is to go beyond the usual division of properties in divorce and help divide retirement assets. These retirement assets could be anything from 401(k) to pension plans.
Without compromise, this order is meant to follow any domestic relations laws that the state makes. It also has to relate to alimony and child support, among other things.
You should know that whichever spouse is contributing to or earning the proceeds of the retirement plan is regarded as “participant.” However, the second party, which could be an offspring, spouse, or ex-spouse, is known as “alternate payee.”
Generally, if you’re getting divorced in the United States and your retirement plans are already a part of your assets, this order is for you.
Why Do You Need this Order?
You need this order primarily because you’re getting divorced, and your retirement plans are involved. However, the full details are a bit more intricate than that.
The state is so keen on this order because the asset administrator of your retirement assets has limits. They cannot willfully divide your assets if ERISA covers it.
ERISA is the Employment Retirement Income Security Act that was created in 1974. It prevents retirement plan participants from legally assigning their stake to another person.
A Qualified Domestic Relations Order is the only way to bend this rule so that your spouse can get their fair divorce division of the retirement assets. However, you should note that an Individual Retirement Account doesn’t need this order to divide the assets in its retirement account for divorcing women.
What Are the Benefits of this Order?
1. Your ex-partner can still enjoy top benefits when you pass away
Like insurance, this order will give your surviving partner the chief benefits if you die. While it might seem strange, it’s actually quite an advantage. For example, it helps your spouse take care of the kids in the case of your death, if they get custody.
2. You won’t have to pay the early withdrawal fee
Ordinarily, if you were to withdraw from your retirement account before age 59.5, there’ll be a penalty. The federal government will take away 10% of what you’re withdrawing. However, with this order, you’ll escape this penalty.
Get a QDRO For Your Divorce Today!
A Qualified Domestic Relations Order is just as principal as any other part of your divorce. But, it can be a bit hard to wrap your head around it all. That is why you need a top of the line consultant. For more information, you can always consult Moon, Schwartz, and Madden for a free consultation (925) 258-7100.Qualified Domestic Relations Order