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When is a QDRO needed in a divorce?

On Behalf of | Sep 22, 2020 | Property Division

When people in Florida get a divorce, they may have some property to divide, including retirement assets. For some retirement accounts, a document known as a qualified domestic relations order is necessary.

Benefits of filing promptly

The person who has the retirement account is called a “participant” in the QDRO, and the other spouse is referred to as the “alternate payee.” It is best to obtain the QDRO at the time of the divorce and submit it to the plan. Once the participant retires and begins drawing benefits, the alternate payee cannot get retroactive benefits if the QDRO has not yet been submitted. Having the QDRO in place during or shortly after the divorce can ensure that no payments are missed.

Other concerns

If the participant dies before the plan receives the QDRO, it will not be rejected on the grounds of the participant’s death, but no alterations in the plan terms can be made. If the divorce is the second one for the participant and the first spouse also filed a QDRO, this does not prevent the filing of a second one. However, simply having a divorce decree may be insufficient for getting a portion of this asset.

People who have retirement accounts or other complicated property to divide in a divorce may want to consult an attorney throughout the process. It is important that the correct steps are taken to minimize any taxes or penalties. For example, a QDRO is not required to split an IRA, but there may be other necessary steps. Since Florida is not a community property state, property division is supposed to be equitable. This is not the same as dividing all property equally. If a couple goes to court instead of negotiating an agreement, a judge may look at a number of factor in determining an equitable division.