Three Facts About Qualified Domestic Relations Orders in Texas

 Posted on April 13, 2022 in Family Law

After your Texas divorce is finalized, chances are that you will be happy to avoid contact with your ex as much as possible. However, alimony or spousal support payments often require spouses to stay in contact with each other, even if only to address logistical issues. Fortunately, some spouses will qualify for something called a Qualified Domestic Relations Order, or QDRO, which allows them to split retirement benefits in such a way that the receiving spouse gets payments directly from the retirement plan administrator. If you are getting divorced and are wondering how a QRDO might benefit you, read on. 

A QDRO Allows You To Retain Favorable Tax Benefits

QRDOs are legal orders from a Texas family court allowing spouses to change partial ownership of their retirement plan when they split marital property in a divorce. With a QDRO, spouses can continue to benefit from tax deferred retirement plans while still dividing community property at the appropriate time. Unlike a house, which must be sold and have its capital gains taxes paid before the value can be divided, retirement accounts can continue accruing value without tax penalties until such time as benefits are paid out. 

A Spouse Receiving QDRO Payments Must Wait Until the Earning Spouse Qualifies 

The spouse who will be receiving payments through a QDRO is known as the alternate payee. The alternate payee cannot receive benefits until the retirement plan member retires and begins receiving his or her own benefits. If the member spouse has already retired when the divorce is finalized, the plan administrator will begin paying out benefits to the alternate payee as soon as the QDRO is processed. 

An Attorney Can Help You Complete Your QDRO

While there are online forms available to help you submit a QDRO on your own, small mistakes can cause the QDRO to get rejected. Individual plan rules can change the paperwork requirements and some plans have unusual forms or procedures that can be tricky to navigate. An attorney with experience handling QDROs can help you avoid unnecessary delays by getting the paperwork right the first time. 

Consult a Fredericksburg Marital Property Division Lawyer

Dividing community property in a Texas divorce can be complicated. If you are getting divorced and want to know more about how a QDRO might help you manage your retirement plan payments, call a Fredericksburg, TX marital property division attorney with Law Office of Russ Alan Baker, PLLC. We can help with every aspect of your divorce so you can start moving on. Call us now at 325-216-2006. 

Sources: 

https://statutes.capitol.texas.gov/Docs/GV/htm/GV.804.htm 

https://www.ers.texas.gov/Contact-ERS/Additional-Resources/FAQs/Qualified-Domestic-Relations-Order