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The importance of the QDRO

On Behalf of The Law Offices of Ronda A. Middleton

Apr 05, 2017
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California couples who are getting a divorce and who have a retirement account might have to divide that assset, and they may need a Qualified Domestic Relations Order to do it. This document may be something couples sign near the end of a divorce process. However, it should not be rushed through. The process of dividing retirement accounts is complex, and it can be expensive if the QDRO is not fully explained. People may want to consult a certified divorce financial analyst who can help them use the QDRO to expedite the transfer of funds.

The retirement account may be divided 50/50 since California is a community property state. In such a case, each person might get half of a retirement account worth $2.2 million. A financial analyst might advise them to anticipate using around $100,000 for fees and taxes and investing the remainder in a tax-free rollover.

However, in a different scenario, one spouse might decide to take the home, which is fully paid off and worth about $200,000, while the other takes a retirement account with $225,000 in it. Even though the worth of the retirement account is greater, the funds may not be immediately available. For example, if the account is a 401(k), the person might be unable to access the money without fees until the age of 59 1/2.

Divorce can be a difficult time, but if couples can work together, they might be happier with an agreement on property division that they negotiate rather than one that a judge decides. Working together with the assistance of their respective lawyers may give couples the opportunity to reach a solution that better suits their individual circumstances.

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We represent clients in Orange County and Southern California in all types of family law matters involving divorce, mediation, property division and issues involving children. Call our Fullerton office at 714-680-9777 or use our online contact form to schedule a free consultation. We ensure a 24-hour response to all inquiries.

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