QDRO’s
My understanding is that QDRO’s relate to property division in a DIVORCE as it relates to retirement plans.
I have a husband & wife who are no longer living together but are also not divorced. I was told by the wife that she is entitled to 1/2 ( $ 500,000.00 ) of the husbands 401(k) once he retires by way of a QDRO even though they are not legally divorced.
What am I missing?
To confuse me further, she is a pastor and is under the assumption that non of these IRA distributions will be federally taxed.
Any thoughts?
Permalink Submitted by Alan - IRA critic on Sat, 2017-02-11 23:33
Perhaps there was a legal separation that could also be used to secure a QDRO. A QDRO applies to a 401k, but not for an IRA division. The spouse who files a QDRO can take penalty free (not not tax free) distributions from the qualified plan, but not from an IRA, so they should not roll these funds over to an IRA until they are 59.5.