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Ask A CPA - Divorce & Marriage Issues

What Is A QDRO, A Qualified Domestic Relations Order ?

In a divorce settlement, retirement funds are subject to division between the spouses. A Qualified Domestic Relations Order is a legal directive to the administrator of the pension, IRA or other retirement funds, to pay a specified amount of money to a former spouse or child. These payments are exempt from the early withdrawal penalty. If payments are made to the former spouse, the spouse may defer tax on the payments if they are rolled into an IRA within 60 days. If a payment is made to a child, that amount is taxable to the former spouse whose retirement funds were taken.

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