A qualified domestic relations order (QDRO) is a judgment, decree,
or court order (including an approved property settlement agreement)
issued under a domestic relations law that:
- Relates to the rights of someone other than a participant to
receive benefits from a qualified retirement plan (such as most
pension and profit-sharing plans) or a tax-sheltered annuity,
- Relates to payment of child support, alimony, or marital
property rights to a spouse, former spouse, child, or other dependent
of the participant, and
- Specifies the amount or portion of the participant's
benefits to be paid to the participant's spouse, former spouse, child,
or dependent.
Benefits paid to a child or dependent.
Benefits paid under a QDRO to the plan participant's child or
dependent are treated as paid to the participant. For information
about the tax treatment of benefits from retirement plans, see
Publication 575.
Benefits paid to a spouse or former spouse.
Benefits paid under a QDRO to the plan participant's spouse or
former spouse generally must be included in the spouse's or former
spouse's income. If the participant contributed to the retirement
plan, a prorated share of the participant's cost (investment in the
contract) is used to figure the taxable amount.
The spouse or former spouse can use the special rules for lump-sum
distributions if the benefits would have been treated as a lump-sum
distribution had the participant received them. For this purpose,
consider only the balance to the spouse's or former spouse's credit in
determining whether the distribution is a total distribution. See
Lump-Sum Distributions in Publication 575
for information
about the special rules.
Rollovers.
If you receive an eligible rollover distribution under a QDRO as
the plan participant's spouse or former spouse, you may be able to
roll it over tax free into an individual retirement arrangement (IRA)
or another qualified retirement plan.
For more information on the tax treatment of eligible rollover
distributions, see Publication 575.
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