What Are The Tax Effects Of A QDRO?

Q. Martin R. of New Mexico asks: "What are the Tax Effects of a QDRO?"

A. Spencer, from the QDRO Department of Pension Evaluators & QDROS Of Troyan, Inc Associates Groupwrites: "Benefits paid directly to any alternate payee by a plan as the result of a QDRO are generally included in the alternate payee's taxable income in the year that the alternate payee receives benefit payments. Also, benefits paid directly to an alternate payee by a plan as the result of a QDRO are not subject to the 10% early withdrawal penalty which is generally applicable to withdrawals from retirement accounts prior to age 59-1/2."

Spencer Olsen

Lead QDRO Analyst

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