During a divorce, issues of GA property division, GA child custody, and GA spousal support can easily overshadow the importance of the division of retirement benefits.  Obtaining a Qualified Domestic Relations Order may be one of the most important documents in a Georgia divorce if a spouse can be awarded with part of their soon to be ex-spouse’s retirement plan.

A Qualified Domestic Relations Order (QDRO) creates or recognizes the existence of an alternate payee’s right to receive, or assigns to an alternate payee the right to receive, all or a portion of the benefits payable with respect to a participant under a pension plan.  Simply put, a QDRO establishes legal rights to receive a designated percent of an ex-spouse’s IRA, pension plan, 401(k), or profit-sharing plans proceeding a GA divorce.

When an ex-spouse receives the entitled money from a retirement plan he/she will be responsible for paying the related income taxes if received in the form of an annuity, pension, or withdrawal and will become a co-beneficiary of the existing pension account.  The entitled ex-spouse can also withdraw his/her share and roll money into his/her own IRA.  A rollover will allow for the postponing of taxes until funds are withdrawn from the IRA.

If funds from a qualified retirement account in Georgia are distributed to an ex-spouse without a QDRO the person with the account, not the ex-spouse receiving the funds, will be responsible for paying the income tax and may even be charged with a 10% premature withdrawal penalty.  Without a QDRO your ex-spouse can receive funds from your retirement plan through a tax-free windfall at your expense.

If you are facing a divorce and the division of retirement assets, QDRO’s can be extremely complicated. We highly recommend speaking with one of our Georgia Divorce attorneys. Contact us for a consultation. We look forward to hearing from you!