A:

Because a qualified domestic relations order (QDRO) is a court order, it cannot be reversed once it is received and processed by the retirement plan. If the instructions to reverse the QDRO were issued by the court, as an amendment to the original QDRO, the administrator of the retirement plan would need to review the new instructions and determine whether they could be followed.
If you owe your husband money, you may want to consider alternate sources (instead of your retirement plan) of payment. Funds paid to anyone from your retirement plan will be considered a distribution to you (see exception below). The distribution will be treated as ordinary income, which will be subject to income tax and, if you are under age 59 ½, an additional 10% early-distribution penalty. In addition, because the assets are being held in a certificate of deposit (CD), the financial institution may assess an early-withdrawal penalty, if the withdrawal occurs before the maturity date. Financial institutions are required to allow you a certain period within which you can rescind the CD without penalty. Check with your financial institution to determine whether this period has expired.
Exception
If the funds are distributed from your IRA to your husband as a result of a court-approved divorce decree, the amount will be treated as a distribution to your husband (instead of you), and he will be responsible for paying any tax and penalty, unless he rolls or transfers the amount to an IRA of his own.
Note: Generally, the term QDRO is used for qualified plans, and divorce decree is used for IRAs. Some judges use the terms interchangeably.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS

  1. Does my employer's matching contribution count towards the maximum I can contribute ...

    Maximize 401(k) contributions on your own without fear; employer contributions are separate and do not hinder you contributing ...
  2. How much will an employer generally contribute to a 401(a) plan?

    Find out how much employers may contribute to an employee's 401(a) retirement plan and why this amount can vary so widely ...
  3. When can benefits be received from a provident fund?

    Find out when participants in provident funds can begin receiving benefits, including how funds can be used to finance important ...
  4. Is Social Security Income a perpetuity?

    Find out why Social Security income is not classified as a perpetuity, including what constitutes a perpetuity and the basics ...
RELATED TERMS
  1. Qualified Longevity Annuity Contract

    A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity ...
  2. See-Through Trust

    A trust that is treated as the beneficiary of an individual retirement ...
  3. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  4. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  5. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  6. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...

You May Also Like

Related Articles
  1. Forex

    The Impact of 401(k) Outflows on Advisors

  2. Retirement

    How to Battle Inflation During Retirement

  3. Retirement

    Does it Make Sense to Have an MLP in ...

  4. Retirement

    Top Tips for Rebalancing 401(k) Assets

  5. Professionals

    Why Millionaires are Running Scared

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!