?? About QDRO

[crazyeights]

What is the name of your state (only U.S. law)? Mi

If a person will need to file multiple QDRO's after a legal seperation, can one delay the filing of a particular QDRO to the following tax year? i.e., file one the first year then another the next for tax purposes.

Thanks

 

[mistoffolees]

What is the name of your state (only U.S. law)? Mi

If a person will need to file multiple QDRO's after a legal seperation, can one delay the filing of a particular QDRO to the following tax year? i.e., file one the first year then another the next for tax purposes.

Thanks

Well, one can always delay. The question is whether it's wise or whether you'll get dragged into court for contempt. Not to mention that QDROs are most commonly used for tax-deferred accounts, so the timing shouldn't affect taxes.

IMHO, QDROs should be filed immediately. Delays lead to fighting over who gets the gains in the account (or, lately, the losses) and simply drags things out. There's really no good reason for delaying it.

 

[LdiJ]

What is the name of your state (only U.S. law)? Mi

If a person will need to file multiple QDRO's after a legal seperation, can one delay the filing of a particular QDRO to the following tax year? i.e., file one the first year then another the next for tax purposes.

Thanks

A QDRO shouldn't have an effect on taxes. A QDRO should divide the retirement benefits into two separate accounts, that the parties can then manage on their own...decide on their own when to take a distribution or not.

 

[crazyeights]

I will need to take the distribution, maybe not all but most of it.

If I take the amount that I will need right away, it puts me in a higher tax bracket. (I have ran the figures) but if I take it seperately, I will have almost no tax consequence, saving me thousands and thousands of dollars. As far as any gains or losses in the meantime, I can pull the money out of the market and put it on the sidelines in one of our accounts.

 

[crazyeights]

A QDRO shouldn't have an effect on taxes. A QDRO should divide the retirement benefits into two separate accounts, that the parties can then manage on their own...decide on their own when to take a distribution or not.

The monkey wrench in this for me is since I need to take the distribution, I want to avoid the 10% penalty. So wouldn't I need to take the distribution once it's available to avoid this?

 

[mistoffolees]

The monkey wrench in this for me is since I need to take the distribution, I want to avoid the 10% penalty. So wouldn't I need to take the distribution once it's available to avoid this?

If you're not withdrawing cash (that is, you're rolling the money into another tax-deferred account), you won't be paying a 10% penalty.

You're still going to pay the 10% penalty if you withdraw the cash - unless you're passing the age threshold. Even then, it wouldn't matter if you defer the QDRO or do the QDRO now and just defer the withdrawal. I would recommend the latter.

 

[mistoffolees]

I will need to take the distribution, maybe not all but most of it.

If I take the amount that I will need right away, it puts me in a higher tax bracket. (I have ran the figures) but if I take it seperately, I will have almost no tax consequence, saving me thousands and thousands of dollars. As far as any gains or losses in the meantime, I can pull the money out of the market and put it on the sidelines in one of our accounts.

Do the QDRO right now and then (if you MUST), withdraw the cash after the end of the year.

 

[LdiJ]

The monkey wrench in this for me is since I need to take the distribution, I want to avoid the 10% penalty. So wouldn't I need to take the distribution once it's available to avoid this?

I think that you should go get a consult with a local tax office...look for one that is regularly open all year long. Have them look over what you are doing, to make sure that everything is clear.