Some of the issues that can arise during the property division phase of a divorce are particularly complex. Unlike dividing stocks or assets that are easy to liquidate, retirement and pension accounts can be difficult to divide.
Retirement accounts and pension funds cannot simply be transferred or liquidated due to federal limitations and steep tax consequences. The good news is that a well-practiced property division attorney can help resolve these issues through a Qualified Domestic Relations Order. You can learn all about your options from a Forsyth County Qualified Domestic Relations Order (QDRO) lawyer.
The Nature of QDROs
A QDRO is a form of domestic relations order that does not transfer ownership of a pension or retirement account from one spouse to another and instead recognizes a person’s legal right to receive the proceeds of an account from their former spouse in the future. When these orders are issued, the law considers the former spouse of the account holder as an “alternate payee.”
A QDRO must meet the necessary legal requirements to be upheld in court. Specifically, a Qualified Domestic Relations Order must:
- Identify the name of each alternate payee;
- Provide their mailing address(es);
- Define every retirement plan that is impacted by the order; and
- Outline payment details, including setting out how the payments should be made as well as the percentage of the account that belongs to the alternate payee.
It is possible for a QDRO to apply to multiple plans or accounts as long as they are identified in the order. Should an order fail to meet these criteria, the QDRO will not be enforceable.
There are many steps that go into developing a legally viable QDRO in Forsyth County. A great step you can take is seeking the guidance of a Forsyth County attorney. With the right legal counsel, you can protect pensions or retirement plans after a divorce.
Tax Penalties Associated with Pensions and Retirement Accounts
The major issue regarding the division of pension funds and retirement accounts involves tax penalties. There are serious financial repercussions that can occur when a pension or retirement account is withdrawn from early. The extent of these penalties will depend on the account holder’s age at the time the withdrawal occurs. That being said, any early withdrawal from a retirement account is likely to result in some form of monetary penalty.
If you are going through a divorce and have reason to worry about tax penalties and fines related to your retirement account or pension funds, protecting these assets could be possible with the guidance of a Forsyth County QDRO attorney.
Call a Forsyth County Qualified Domestic Relations Order (QDRO) Attorney Today
When it comes to protecting your pension or retirement funds post-divorce, a QDRO might be the solution. These court orders allow you to receive funds without unnecessary tax consequences that can come with early withdrawals.
You don’t have to deal with this challenging issue alone. Reach out to our firm today to schedule an appointment with a Forsyth County Qualified Domestic Relations Order (QDRO) lawyer.
