Advanced Underwriting Consultants

Question of the Day – August 23

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question:  My client is getting divorced.  She and her spouse are trying to divide up the husband’s government pension with a qualified domestic relations order (QDRO).  Is that possible?

Answer:  Maybe.

A QDRO is usually used to divide up a participant’s interest in a qualified plan between the participant and the participant’s ex-spouse.  A QDRO allows the participant and his spouse to actually divide the account, as well as to avoid several adverse income tax results.

A governmental pension plan is not required to honor a QDRO.  (See http://www.kmfpc.com/news/view?id=13.)  The tax code does permit the government entity to choose to honor QDROs if it desires.  The entity must issue its own procedures and rules for how it will honor QDROs if it decides to accept them.  Those who are seeking to have a QDRO honored by a governmental pension administrator should check in advance as to whether it will honor QDROs, and what administrative rules need to be followed.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.