What is a QDRO and Will I Need One for My Florida Divorce?

You may not want to hear this, but those retirement accounts that have been accruing value while you work are subject to distribution in a Florida divorce. That means that your spouse is entitled to half the proceeds from your retirement accounts (or more—Florida is an equitable distribution state). But you aren’t allowed to access retirement accounts without incurring financial penalties until the accounts mature. So, how are they distributed?

In the case of retirement accounts, a Qualified Domestic Relations Order (QDRO) is required to access and divide the proceeds of the retirement account without incurring a financial penalty. In this article, the Clearwater divorce lawyers at Cairns Law, P.A. will discuss QDROs and how they work.

What is a QDRO? 

A QDRO is an important legal document in divorce proceedings. It allows for the division of retirement plan accounts between spouses. A QDRO defines how retirement assets accumulated during the marriage will be distributed. This ensures that both parties receive their fair share. The “plan participant” (the primary wage earner) and “alternate payee” (the spouse entitled to proceeds from the retirement plan) each have their own role to play in this process. QDROs are necessary to avoid withdrawal penalties and tax consequences when equitably distributing retirement plans during divorce.

How can I obtain a QDRO?

The process begins with consulting a divorce lawyer who is skilled in managing QDROs. Your divorce attorney will assess your situation and guide you through the process. Next, your attorney will identify the retirement plan accounts subject to division. This includes 401(k)s, pension plans, IRAs, and more.

Once the plans have been identified, your attorney will draft your QDRO specifying distribution terms, percentages, and other details. The QDRO is then submitted to the court for approval, ensuring it complies with Florida’s laws.

After the court has taken a look, the plan administrator reviews the QDRO for compliance. Once the QDRO has been approved, funds can be distributed via the QDRO. Options include lump sum payments, rolling the amount over into an IRA, or periodic payments.

• Lump-sum payment – One option is to receive your entire share of the QDRO in a lump sum payment. This could, however, trigger tax implications and penalties.
• Rollover into an IRA – You can also roll the funds into an IRA without incurring any immediate tax liabilities.
• Periodic payments – Some QDROs allow for periodic payments ensuring a steady stream of income. There are, however, tax implications inherent in this choice.

Whichever method you choose should align with your financial goals and circumstances. You can consult with your divorce attorney who can help you make an informed financial decision and help secure your financial future moving forward.

Talk to a Clearwater, FL Divorce Lawyer Today 

Cairns Law, P.A. represents the interests of Florida residents who are pursuing a divorce. Call our Clearwater family lawyers today to schedule an appointment, and we can begin discussing your goals and concerns right away.