
Quoting
qdro
My question involves a marriage in the state of: FLORIDA
I was divorced several years ago and awarded part of my ex-husband’s vested pension in Company A. This was a traditional defined benefit pension, with payouts expected eight years from now.
After the divorce my ex went to Company B. He recently accepted an unexpected cash buyout offer from Company A, and the entire amount was distributed to him. I was not in the loop because my attorney never submitted the signed QDRO to the plan administrator.
The QDRO states: “While it is anticipated the Plan administrator will pay directly to Alternate Payee (me) the benefit awarded, Participant (ex-husband) is designated a constructive trustee to the extent Participant receives any retirement benefits under the Plan that are due to Alternate Payee (me) but paid to Participant. Participant is Ordered to pay the benefit above directly to Alternate Payee…”. QDRO also states I am ORDERED to report any retirement payments I receive on my income tax return.
While my ex intends to give me my share, exactly how much is the question.
Problem is the tax consequences. Since my portion of the money is in his possession, I can no longer take advantage of directly rolling it from the plan into my own IRA. The monies were rolled into his IRA. Which means any money he withdraws now for me is subject to a 20% automatic withholding, and when he files his taxes an added 10% early withdrawal penalty, and another 10% because of his income bracket.
So if my share is $60K, does he legally only owe me whatever is left after his taxes on that, which may be roughly $35,000?
Would that leave the money free and clear for me, or is it subject to taxation again as my income?
Thanks in advance for any assistance