Both of you may be right, sometimes you need a qualified domestic relations order to transfer funds and sometimes you need a direction of payment, check with the fund that you taking the money from that should tell you. take care and yes it is an IRS thing a qcro allows you to move money without a tax consquenece under certain circumstances, divorce being one.
Legal disclaimer: The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of Massachusetts. Responses are based solely on Massachusetts law unless stated otherwise.
The Qualified Domestic Relations Order (QDRO) is only for the Plan Administrator, not the IRS. If the Plan Administrator only needs a letter or a copy of the Judgment of Divorce, then that is all you need -- assuming your ex-spouse agrees.
You will need to set up a qualified account. If you do not, then the money that comes to you may be considered income by the IRS and you will taxed on it. You may also incur a penalty for early withdrawal from your ex-spouse's qualified account. Usually this can be avoided by setting up the same type of account in your name as your ex had in his/her name. You do not need to use the same brokerage house. Please consider consulting a tax professional on this as we do not provide tax advice.
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