QDRO and Rollover IRA(s) Consolidation

Submitted by Dean Strom on Wed, 2022-02-23 17:24

Hello–

I have a prospective client who has two separate Rollover IRAs (from previous 401(k)’s) and a QDRO from her divorce, several years ago. She is 55 years-old. Is it allowed, to merge the two Rollover IRAs with the QDRO, into one Rollover IRA? And if so, are there any potential pitfalls or things that I should watch out for?

Thanks in advance for any answers and direction…it’s been several years since I’ve dealt with a QDRO and need a little refresher on their rules.



Submitted by Alan - IRA critic on Wed, 2022-02-23 20:50

If the QDRO settlement is still with the 401k, and if the plan allows her to do a direct rollover, she will be subject to IRA rules. That means if she can take penalty free distributions from the 401k now prior to 59.5, she will lose that option once the funds are rolled into an IRA, whether combined with other rollover IRAs or not. 

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