Qualified Domestic Relations Orders (QDROs)
Chapters in this video
- 0:00 Introducing Clara, Avery, and the QDRO scenario
- 1:15 What a QDRO is and what it covers
- 2:15 The IRA exam trap: transfer incident to divorce
- 2:57 The 10% penalty waiver and required elements
- 4:19 QDRO limits: no bigger pie
- 4:53 Rollover versus cash distribution for the alternate payee
- 5:41 Rapid-fire exam recap
What this video covers
- What a Qualified Domestic Relations Order (QDRO) is and which retirement plans it governs under the Employee Retirement Income Security Act (ERISA) and Internal Revenue Code (IRC)
- Why IRAs never require a QDRO and instead use a transfer incident to divorce, the most frequently tested trap on this topic
- The four required elements that make a QDRO valid: names and addresses, plan name, amount or percentage, and number of payments or period
- Why a QDRO cannot increase total plan benefits or require benefit types the plan does not already offer
- How the 10% early withdrawal penalty is waived for QDRO distributions regardless of the alternate payee's age
- The tax difference between a rollover to the alternate payee's own IRA or qualified plan and a cash distribution taxable as ordinary income
- Whether a cash distribution under a QDRO is penalty-free, tax-free, or both
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