Over time, residents in Ohio who contribute to 401(k) accounts may be able to accumulate a valuable asset. Because these accounts are subject to taxes if funds are accessed before a certain threshold is met, dividing the account during a divorce may be difficult. However, in many jurisdictions, a qualified domestic relations order might be used to divide the asset while avoiding unnecessary tax penalties.
A QDRO is a court judgment that provides that some of the assets held in one person’s 401(k) are transferred to the ownership of another individual. This type of order may be used to fulfill spousal maintenance payments, child support payment and property division. Despite its usefulness, the orders must meet a set of established standards before it can be considered a QDRO.
For example, the order must be issued in compliance with various state laws. The document must also contain the name of the person who holds ownership of the account in question and that person’s mailing address. The name and address of the person receiving the funds must also be included. The order should also contain other details, such as the percentage that is being transferred, the number of pay periods that percentage is effective and the exact plan to which the order applies.
Requesting a QDRO through the courts may be a complicated endeavor, and other aspects regarding divorce and property division can become contentious and difficult to handle. However, an attorney who is familiar with such proceedings could provide some help to a client who becomes involved in disputes over property division and support payments.
Source: 401k.org, “401(k) and Divorce“, January 05, 2015