After your Texas divorce is finalized, chances are that you will be happy to avoid contact with your ex as much as possible. However, alimony or spousal support payments often require spouses to stay in contact with each other, even if only to address logistical issues. Fortunately, some spouses will qualify for something called a Qualified Domestic Relations Order, or QDRO, which allows them to split retirement benefits in such a way that the receiving spouse gets payments directly from the retirement plan administrator. If you are getting divorced and are wondering how a QRDO might benefit you, read on.
A QDRO Allows You To Retain Favorable Tax Benefits
QRDOs are legal orders from a Texas family court allowing spouses to change partial ownership of their retirement plan when they split marital property in a divorce. With a QDRO, spouses can continue to benefit from tax deferred retirement plans while still dividing community property at the appropriate time. Unlike a house, which must be sold and have its capital gains taxes paid before the value can be divided, retirement accounts can continue accruing value without tax penalties until such time as benefits are paid out.
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