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Do I Have to Pay Taxes on a QDRO?

A Qualified Domestic Relations Order (QDRO) is an order from the court directing the plan administrator of the retirement account to divide up the funds in the account between the spouses. The quick answer to the question:

NO, YOU DO NOT PAY TAXES ON A QDRO.

Assuming you do not cash out your share of the retirement account, you will not pay any taxes. The plan administrator will simply divide up the account and a new account will be created in the alternate payee’s name.

A QDRO must be done correctly. If something is done wrong, the best case scenario is that the plan administrator catches the mistake and rejects the QDRO. Worst case scenario, you will not get the retirement amount you were supposed to get.

Many plan administrators will have a sample QDRO that they prefer you to use. Utah Retirement System is, by far, my favorite plan administrator to work with. They are organized and efficient. A QDRO with them can usually be done in just a few short weeks while many other companies will delay months. Furthermore, give them a call and they will email you a word version of the proposed QDRO. All you have to do is follow the instructions while filling out the pleading.

If you need a QDRO attorney, we can help. We charge a flat fee of $350.00 per QDRO. This includes all costs associated with the Court (which are nominal anyway, usually just a $10 certified copy fee), mailing costs and attorney fees. The only other fee you might incur is what the plan administrator charges you to process the QDRO. Generally, they will just pull their fees right out of your account. Some will charge nothing. Others will charge $500 or more.

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