A Qualified Domestic Relations Order (QDRO) is an order in which the court issues instructions for a specific retirement account to transfer funds from one spouse’s account to another spouse’s deferred compensation account (typically an IRA) following a divorce. When an individual makes an early withdrawal (prior to age 59 ½) from a retirement account s/he must pay a 10% federal penalty and a 2 ½% California penalty as well as the income taxes owed on the withdrawal.
A QDRO allows an individual to transfer funds from the account to the other spouse’s without a penalty regardless of age. According to California community property law, spouses own together all property acquired during the marriage equally, which includes retirement benefits acquired. When a couple divorces, the retirement accounts are divided equally (or as needed to create an equal distribution of all property).
Getting Legal Help
QDROs are a common but fairly complex aspect of finalizing property division in a divorce. Experienced Sacramento Family Law Attorney Hal Bartholomew can help you get through your divorce with respect and compassion. Contact Bartholomew & Wasznicky LLP today for knowledgeable and respectful representation. Call us at (916) 546-4393.