In a Georgia divorce, you might come across a term labeled QDRO, which stands for Qualified Domestic Relations Order. It can play an important role in the division of retirement assets during divorce proceedings.
Learn the answers to some frequently asked questions about how a QDRO functions in your Georgia divorce.
1. What is a QDRO?
A Qualified Domestic Relations Order is a judicial order that gives a person other than the retirement plan participant, the right to receive some of the benefits in a retirement plan. In the context of a divorce, a QDRO allows the ex-spouse of a retirement plan participant to receive their share of the benefits as stipulated in the divorce decree.
2. Why is a QDRO important in a divorce?
In a divorce, a QDRO ensures that each party receives their fair share of retirement assets as per the divorce agreement. Without a QDRO, the ex-spouse of a retirement plan participant would not have access to their portion of the retirement benefits, even if the divorce decree states that they should get a share.
3. Can you get a QDRO changed?
Once a court issues a QDRO, it is generally irrevocable unless there is a compelling reason to change it. If both parties agree on a modification, they can present the changes to the court for approval. Any changes must adhere to the plan’s requirements and cannot increase the benefits beyond the amount determined by the plan.
4. How does a QDRO affect taxes?
When the ex-spouse of a retirement plan participant receives their share of the benefits because of a QDRO, they are responsible for the taxes on the amount they receive. However, they can defer taxation by rolling over the benefits to an individual retirement account or another eligible retirement plan.
A QDRO makes sure that each party receives a fair amount of the retirement benefits, as per the divorce agreement.