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The QDRO and splitting retirement plans in divorce

13583508_S.jpgMissouri couples who are getting a divorce may have property they need to divide, and a retirement account might be one of those pieces of property. Before certain types of retirement accounts can be divided, a document known as a Qualified Domestic Relations Order must be prepared and signed. Attorneys who are well-versed in the legal aspects of divorce might still refer people to a certified divorce financial analyst to get a better understanding of this complex document.

The QDRO can make the transfer of funds more efficient, or it can be costly and confusing. For example, with the guidance of a financial analyst, a person who gets half of a retirement fund in the amount of $1.1 million might be able to invest $1 million in a tax-free rollover and set the remainder aside for taxes and fees.

However, a couple might decide that they will skip dividing the account and that one will keep the home while the other keeps the 401(k). The home might be fully paid off with a worth of $200,000 while the 401(k) might be worth $225,000. However, the financial adviser might point out that the person getting the 401(k) will be unable to access it without penalties and fees until they are 59 1/2.

Property division is one of a number of issues that must be dealt with in a divorce. If a couple has children, they have to make decisions about custody and child support. If one person has a significantly lower income than the other or has not worked outside the home, that person might receive support payments from the former spouse. These arrangements may be negotiated between the couple assisted by their respective attorneys, or they might be decided in court by a judge.

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