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Acronym refresher: What is a QDRO, and how does it work?

| Mar 21, 2019 | Divorce, Firm News

Dividing marital assets in an Arkansas divorce is hardly a boilerplate exercise for soon-to-be exes. Property distribution can vary widely, from being a relatively quick and simple matter to involving close assessment of multiple asset types and amounts.

For many splitting couples, thoughts obviously turn to the family home. Additional pieces of realty might also be involved. Perhaps a family business is a front-and-center concern. That is often similarly true of various savings/investment accounts, pensions, bonuses, stock options, heirlooms and collectibles and other sources of wealth.

For some divorcing spouses, the acronym QDRO will loom large and be significantly important in the property division process. The formal designation for that shorthand reference is “qualified domestic relations order. A QDRO is a key consideration in cases involving inter-spousal transfer of interest in a retirement account or related company-sponsored investment vehicle.

Without a QDRO, tax implications could conceivably arise for both the payer and recipient of monies held by the former in an account. Federal law was created to avoid that result. As we note on our family law website at Robertson, Oswalt, Nony & Associates, a QDRO “allows the non-account owing spouse to receive money from the account.”

Adhering to the requirements of a QDRO is not merely a good idea to avoid tax implications arising in a transfer of money from a sheltered account. Rather, it is mandated concerning any such transaction.

And there are quite technical and specialized rules that must be followed. A divorcing Arkansas party can address those, along with related QDRO considerations, through discussions with a proven Little Rock family law attorney.

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