When people in Connecticut decide to get a divorce, they often only think of the emotional consequences, which is understandable. But the financial effects on the person’s life are no less important, and when emotions are running high, it’s very easy to make a choice that person may later regret. Experts say that people considering divorce may want to get a qualified domestic relations order, or a QDRO, which can help with asset division. Here’s how a QDRO works and what it can do.
A QDRO is a court order used to divide retirement plans, generally private pension plans like a 401(k), as part of a divorce agreement. The QDRO usually says that each spouse gets a portion of specified retirement accounts. When the QDRO goes into effect, money from one spouse’s retirement account is moved to the other’s. That second spouse doesn’t have to pay tax unless the amount is converted to cash or put into a Roth IRA.
Getting divorced is often an event fraught with hurt feelings, and a QDRO can help make some parts of asset division more straightforward. It ensures fairness and prevents arguments, even ones that may happen in the ensuing years. Another good thing about a QDRO is that, normally, people incur a 10% penalty for making an early withdrawal from a retirement account, but the QDRO prevents that from happening.
A QDRO may not be the right choice for everyone. The best way for a person here in Illinois to know that is by consulting an experienced family law attorney. An attorney can offer professional advice about numerous aspects of asset division during divorce.