What are the risks of preparing your QDRO after your divorce is settled?
By way of background, a QDRO stands for a Qualified Domestic Relations Order. It is an order in the United States that enables a non-employee spouse to become a participant or receive monies from an employee spouse’s retirement plan. It is usually best to have the...
What issues exist with survivor benefits under a QDRO?
Background and Context Under ERISA Section 205 and IRC Sections 401(a)(11) and 417, retirement plans are required to provide a participant’s spouse a survivor benefit. In other words, if the participant passes away the survivor benefit should apply to the surviving...
How do you divide up a defined contribution plan via a QDRO?
The benefit received under a defined contribution plan depends on the amount of the participant’s account balance and whether the QDRO has provisions that guard against various events that could occur such as if the market goes down which could erode the remaining...
What types of plans are impacted by a QDRO?
QDROs usually come into play with either a defined benefit plan or a defined contribution plan. Defined benefit plan — A defined benefit plan, by definition, usually provides for lump sum payment to the participant. The plan usually uses an actuarial formula which...
What methods are used to separate financial benefits in a QDRO?
In a Qualified Domestic Relations Order there are two common approaches used to split the benefit payments under a defined contribution plan and under a defined benefit plan. They are: Shared payment approach A shared payment approach enables an alternate payee to...
How to handle an AMT credit carry forward in a divorce
When Tax Carry forwards exist in the marital estate How do you handle an alternative minimum tax (AMT) carry forward for purposes of your divorce process? Brief definition of AMT tax Years ago the government instituted an alternative minimum tax for people who were...
Consider updating the named successor on a 529 plan during your divorce
Background and context Parents or grandparents who establish 529 plans often forget to establish a successor on the account. Why do you need to establish a successor on a 529 plan? With all of the good that a 529 plan is meant to accomplish, the beneficiary may find...
Are there any tax ramifications to a QDRO?
In order to properly manage the financial implications of a QDRO you need to involve a financial divorce expert in the process. Ideally you would involve a financial divorce architect as these professionals understand how the “divorce chess board” works, even if you...
Charitable contribution carry forwards and divorce
When tax carry forwards exist in the marital estate Background This has become a sensitive issue given the 2018 tax reform act. Why? The new tax laws limit how much a taxpayer can take as their standard deduction. You may have heard about the $24,000 standard...
How do you serve divorce papers to your spouse who is overseas?
If you have decided you want to get a divorce and your spouse is not in the United States, how do you serve your spouse “papers” while she or he is not in the country? This is an important issue to address. Why? Your divorce decree will not be considered legally valid...