Qualified Domestic Relations Orders Attorneys
For divorcing spouses who are either planning to acquire a retirement package or presently have a retirement package or deferred compensation account in place, a Qualified Domestic Relations Order, or QDRO, may be key to avoiding tax penalties during the distribution of assets. For more information about Florida law regarding QDRO, contact our Sarasota family law firm.
What Is A Qualified Domestic Relations Order (QDRO)?
A Qualified Domestic Relations Order, or QDRO, helps spouses who are dividing retirement or deferred compensation accounts to avoid tax penalties from the government. Schedule a consultation with Tobaygo Law in Sarasota, FL, for experienced counsel for all matters pertaining to family law and divorce in the State of Florida.
How Is QDRO Determined?
To understand why a QDRO is so valuable, imagine a case in which one spouse during a divorce accumulates a significant tax-deferred retirement account over the course of the marriage. Florida law on equitable distribution states that in a Florida divorce, any marital assets, property and/or debt accumulated during the marriage should be equitably divided between the parties at the time of divorce. The presumption is that divorce courts will divide equally pensions, IRAs, and any other type of retirement account between the spouses.
How Much Does A QDRO Cost?
The cost associated with hiring an experienced attorney to draft a QDRO is reasonable. The cost of a QDRO usually amounts to the equivalent of two or three hours of billable time for your Florida divorce attorney. The attorneys with our law firm are familiar with the significance of managing the creation of and successful completion of Florida QDRO to help clients avoid tax penalties during the divorce process. Contact us today for more information about how a Florida divorce may impact your pension or retirement account.
How Does QDRO Help Avoid Tax Penalties?
In the case of equitable distribution of marital assets, debts, and property, one spouse in a divorce is awarded half of the other spouse's pension. If the money is simply taken out of the retirement plan, the spouse who primarily possesses the plan will receive a significant tax penalty for the deduction of funds from the account.
The State of Florida allows the use of a QDRO during a divorce to transfer the funds from one retirement accounts directly into the retirement account of the other spouse. Because the funds were never removed — the funds were simply transferred to another tax-deferred account — no tax penalties occur.