Know what a QDRO is?
In a recent blog post (please see our entry dated September 4, 2013), we discussed the critical importance of advance planning for any person engaged in a divorce proceeding. As we noted, issue spotting of relevant considerations, with the close assistance of a proven divorce attorney and other professionals, is as essential component in securing a fair and equitable outcome in any marital dissolution.
That is certainly true in Colorado, and it applies closely to retirement assets that can configure largely in divorce decrees. Property division in a Colorado divorce -- especially a high-asset divorce -- often centers on the money that one or both partners hold in various retirement accounts, such as pensions, company-sponsored 401(k) plans, IRAs and related savings vehicles.
The obvious question: How to divide them equitably in a divorce?
An experienced divorce attorney will have much to say on that subject, and in doing so might very well reference the abovementioned QDRO.
That acronym actually stands for "qualified domestic relations order." A QDRO is a legal process and mechanism that allows for partial or complete transfer of one divorcing spouse's workplace retirement assets to the other spouse without triggering taxes or associated penalties.
That is obviously important, and it signals an essential point in many divorces, namely this: Taxes are often the elephant in the room. In other words, they loom large.
Yet there is also this caveat: A family law divorce attorney with deeply grounded experience in property division matters will know well about the role that taxes can play in asset division and how to optimally respond in ways that do not trigger outlays and penalties.
It all comes back to issue spotting and careful advance planning.
Source: Fox Business, "How to split up retirement assets in a divorce," Marilyn bowden, Sept. 16, 2013