The idea of divorce seems simple enough: two individuals who are married wish to end their legal relationship. But, as they say, the devil is in the details. Every divorce is unique, and complex, emotional, and often lengthy legal issues can arise. This is why it is important for you to familiarize yourself with the law, know where to turn for help, and diligently work to protect your best interests.
If you are going through a divorce, then you may have heard the phrase "qualified domestic relations order," or QDRO. What is it? A QDRO is a judgment, or order, handed down during a divorce that requires spousal support, child support, or property interests to be paid from an opposing spouse's retirement account. Since this is a court order, it must be complied with unless other arrangements are made.
If you receive payments from a QDRO, then you need to report that payment on your taxes. Failing to do so could result in unwanted tax penalties. If, however, the payment is made to your child, then the payment is taxed to the individual participating in the retirement account.
If you feel that your obligation to your former spouse or your child is drawing too much from your retirement accounts, then you should think about seeking legal assistance. By taking legal action, you may be able to obtain a modification to your support obligation. Similarly, if you feel that an alimony or child support agreement has shortchanged you, then you should consider your legal options.
Divorce is often a messy business, emotionally and legally. When you are emotionally involved in the matter, it can become difficult to properly analyze all of the facts. Therefore, a qualified Ohio family law attorney may prove helpful.
Source: IRS, "Retirement Topics - QDRO - Qualified Domestic Relations Order," accessed on July 4, 2015