What happens if I don't file a qualified domestic relations order (QDRO)?

If you have a 401k or other retirement account, you may need to file a qualified domestic relations order (QDRO) if you are filing for divorce. This order establishes the rights of your spouse to your pension fund after divorce.

QDRO Explained

If you do not have a QDRO, you may be entitled to pay taxes on the money received by your ex-spouse because the IRS will consider the income a taxable distribution to you. Also, if the money is withdrawn prior to your reaching full retirement age, you may be required to pay penalties associated with early withdrawal.

Some things you should know about the QDRO, include:

• When your ex receives money from your pension fund, your ex will be responsible for paying related income taxes.
• Your ex may roll the funds into a retirement account upon withdrawal of the money.

It is important to get tax advice when making decisions about your money at divorce. Proper tax planning can save you a considerable amount of money in your retirement.

Getting Legal Advice

If you are contemplating divorce, there are complicated financial matters to deal with. An experienced family lawyer can help you decipher the financial details, which forms to file and other important legal matters.