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The role of a QDRO in a divorce

Couples in San Jose who are getting a divorce might need to divide their retirement accounts. This could be a more complex process than either individual realizes because of the Qualified Domestic Relations Order. It is necessary to sign a QDRO in order to split retirement savings. Individuals might need to work with a certified divorce financial analyst to make sure they understand the potential taxes and other costs associated with the QDRO and that they are getting the best deal they can.

A QDRO may be used to pay child support or alimony. Since California is a community property state, it might be divided 50/50 between spouses although the percentage might vary depending on other circumstances.

A couple might decide that one party will keep the retirement account while the other keeps the home. This might look like a better deal if the retirement account is worth more than the home, but this might not necessarily be the case. There could be costs associated with transferring the 401(k) or taking distributions associated with the account before the recipient is 59 1/2 years of age. In a different scenario, each spouse might receive $1.1 million from a retirement account. Each might be advised to keep $100,000 to cover expenses and put the rest in a roll-over.

Finances can be a concern for individuals in a high-asset divorce. There may be additional complicated property negotiations over businesses, out-of-state real estate and collections. If one individual has been the primary earner while the other has not worked outside the home, the primary earner may have to pay a substantial amount of support to the other. However, the two may be more satisfied with an agreement on property division that they negotiate with the help of their attorneys instead of going to court.

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