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Do I Need a QDRO in My Divorce?


Couples who decide to end their marriages in Florida must divide all of their assets in an equitable manner. This applies not only to bank account funds, real estate, and personal possessions, but also to investments and retirement accounts, with division of the latter often proving to be particularly complicated. For instance, unless two parties can work out an arrangement where each retains possession of their respective retirement plans, or where other marital assets are offered in the place of the account, couples will almost always need what is referred to as a qualified domestic relations order (QDRO). To learn more about dividing your marital assets, including retirement accounts, please call our experienced property division legal team today.

Using a QDRO

QDROs are court orders that allow couples to divide retirement assets, including 401(k) and pension plans, without incurring a fee or taxes for early withdrawal. Besides being a recognition of a spouse’s rights, QDROs also outline payment details, including how much a person can expect to receive, as well as when they can receive it.

The payment amount included in a QDRO depends on a number of factors, including:

  • How long the couple was married;
  • How much of the retirement assets were earned during the marriage;
  • Each spouse’s debts and liabilities;
  • Each party’s financial contributions to the value of their marital assets; and
  • The type of retirement plan.

The parties to a divorce can also usually decide how they wish to receive the retirement assets, although they may be limited by the type of plan in question.

Distribution Options

Individuals have a number of different options when it comes to deciding how they will receive their portion of a retirement account. For instance, some parties choose to receive the assets in the form of an annuity, or regular installments, as this allows for the spreading out of the tax burden. Alternatively, a spouse who has been issued a QDRO can also choose to:

  • Collect the other spouse’s retirement assets in a lump sum;
  • Keep the assets in a retirement plan until a later date;
  • Leave the funds in the other spouse’s plan, but retain the right to invest it; or
  • Transfer the money into a rollover IRA.

There are pros and cons to each of the options. Those who choose to accept a lump sum payment, for example, will need to pay taxes on that amount immediately. Keeping the assets in the retirement account, on the other hand, allows those assets to continue to grow tax-deferred until retirement, while transferring funds into a rollover IRA account would help keep the assets under the party’s control, while also deferring taxes. Which of these options is best for a couple will depend on the specific circumstances of their divorce, making it especially important to consult with an attorney before coming to a final decision.

Contact Our Office by Phone or Online Message

If you are getting a divorce, you and your spouse will need to divide all of your marital assets, including retirement plans. Call our office today at 954-945-7591 to set up an initial consultation with experienced Fort Lauderdale property division lawyer Sandra Bonfiglio, P.A.

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