QUALIFIED DOMESTIC RELATIONS ORDER (QDRO):
01.Core Concepts
FORMER SPOUSE PAYEE: EXAMPLE • After several years of marriage Paul and Tina divorce. Paul has a qualified retirement plan through his current employer with a balance of $500,000. • The qualified plan provides for a lump-sum distribution of a percentage of the account balance. • Paul and Tina’s QDRO states that Tina is to receive 50% of the account balance. • A lump distribution to Tina of $250,000 will be made by the plan, with the plan withholding the required 20% for federal income tax. • Tina is subject to ordinary income tax treatment for the entire lump distribution ($250,000) but will not be required to pay the 10% penalty for early withdrawal.