During a California divorce, spouses may divide retirement plans as part of their community property distribution settlement. However, certain types of retirement plans require a special court order in order to access those funds after a divorce. Known as a qualified domestic relations order (QDRO), failure to include this order in a divorce can have drastic consequences. At the Law Office of Bradley S. Sandler our divorce attorney is here to help with this and all other legal issues. To learn more, call or contact our office today to schedule a consultation.
Qualified Domestic Relations Orders
A qualified domestic relations order is necessary to identify an alternate payee who is someone other than the defined participant for certain types of retirement plans. The court order gives permission for these plans to give some or all of the funds to someone other than the person named as the fund recipient. A QDRO can also provide for survivorship benefits, where the alternate payee does not gain access to the fund until the plan participant has passed away.
Qualified domestic relations orders are not required for all retirement plans, but they are necessary for all plans that fall under ERISA laws. Some of the most common types of retirement plans that require a QDRO include the following:
- 457 plans
- Thrift plans
- Money purchase plans
- Tax shelter annuities
- Profit-sharing plans
- Employee stock ownership plans
- Business or corporate defined benefit or pension plans
An experienced California divorce attorney will be able to review the retirement plans in your divorce to determine whether any will require a QDRO.
What Must a QDRO Include?
A QDRO must contain certain provisions in order for the plan to distribute funds to an alternate payee. This includes the name of the participant, the name of the alternate payee, the amount or percentage of the fund allocated to the alternate payee, the length of time for the payouts, and the number of payouts on the plan.
An alternate payee can decide to either take their portion of a retirement plan included in a qualified domestic relations order as a lump sum or in monthly installments over time. The lump sum option can also be a rollover into an IRA or other eligible plan. However, it is important to know that if the amount is taken as a lump sum, the alternate payee is responsible for the taxes on that distribution. It is recommended, if possible, to either rollover the funds or to wait as long as possible and take the distributions in smaller installments to spread the cost of taxes on the payments.
Contact The Law Office of Bradley S. Sandler Now
Would you like to speak with a knowledgeable California divorce attorney about filing a QDRO for your case? If so, call the office or contact us today at the Law Office of Bradley S. Sandler in Los Angeles to schedule an evaluation of your case.