If you or someone you know is facing divorce in Georgia, one of the many issues that must be addressed is the division of marital property and assets. This includes the division of real estate and personal property. Marital property may include but is not limited to, cars, furnishing, homes, savings accounts, pensions, and 401(k) retirement accounts. Of note, several types of pensions and other retirement accounts may be divided equitably among the couple – though this may not always result in an even 50/50 split of these assets. As part of the division of marital property, a qualified domestic relations order (QDRO) may be necessary. Below is general information on QDROs.
What is the Qualified Domestic Relations Order?
A qualified domestic relations order, or QDRO, is a court order that gives the retirement plan administrator instructions on how retirement assets should be distributed among the divorcing couple. Generally, retirement benefits are tax-deferred, meaning any transfer or movement of funds may trigger a tax liability for one or more of the parties as well as early withdrawal penalties imposed by the IRS. The purpose of a QDRO is to allow a smooth and clean transfer between the spouses of these retirement funds without the consequences of penalties or taxes.
Georgia’s domestic relations laws govern divorce cases and mandates that each spouse provides financial disclosures to the court. These disclosures require the spouses to list all property and assets that were acquired during the marriage as well as the current value of those assets while the divorce is pending.
When a Qualified Domestic Relations Order Applies
Of note, not all retirement benefits are subject to a QDRO in Georgia. Only retirement benefits that are governed by the Employee Retirement Income Security Act of 1974 (ERISA) and qualify under the IRS guidelines are subject to a QDRO. ERISA is a federal law that governs all employer-sponsored welfare benefit plans. Simply put, if the retirement account was obtained through an employer, and it also qualifies under the IRS rules, then it is likely subject to a QDRO.
Should a QDRO be necessary to divide a qualified retirement benefit in a Georgia divorce, the QDRO is typically drafted by one of the attorneys who is handling the divorce once the legal separation has been finalized. The spouse who is receiving the retirement benefits as a result of the Georgia divorce has options as to how the funds will be received. In order to help avoid tax consequences or early withdrawal penalties for either party, it is prudent to elect to have the funds rolled over into a newly created or already existing 401(k) or another retirement plan.
Military Members and Divorce in Qualified Domestic Relations Order
If one or more of the spouses in a Georgia divorce is an active member of the Armed Services, he or she has the right to delay – or even stay – divorce court proceedings under the Servicemembers Civil Relief Act (SCRA). Simply put, if a petition for divorce is filed by one spouse and the other spouse is deployed on active duty, he or she has the right to be granted a delay or stay to respond to the divorce paperwork. Under the SCRA, an active service member may request an initial 90-day extension to respond. A Georgia judge may grant a longer stay for the military spouse, depending on his or her circumstances.
Qualified Domestic Relations Order in Georgia
Georgia’s divorce law can be complicated, particularly if a QDRO is needed after the final divorce decree. If you or someone you know is facing divorce in Georgia – or if you have questions about any family law matter – contact the experienced attorneys at Moffitt Law, LLC today.