mamiwood
newbie
Reged: 04/11/05
Posts: 40
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Can someone explain what is this process???How does the person receiving it protect themselves or do they have to..Is the money in cash or not....
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Gecko
Carpal \'Tunnel
Reged: 06/01/04
Posts: 19804
Loc: Third rock from the sun
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Qualified Domestic Relations Order.
In a nut shell, it's a legal document used to divide a retirement account without incurring interest/penalties. It's given to the adminstrator of the "plan" and they cut a check to the person to receive the monies.
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If you air your dirty linen in public, expect people to comment on the skid marks!
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BessHan
member
Reged: 01/12/06
Posts: 110
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Gecko, that's not always the case.
Depending on the order, the admin. may set up an acct. in the receivers name. After that account is set up, the $ in the new acct. can be left there by the receiving party, or cashed out. If it is cashed out, tax penalties will be incurred.
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Bess H. : )
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getnadivorce
old hand
Reged: 08/22/05
Posts: 791
Loc: Illinois
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Tax penalties are only incurred if the transfer out of the account don't meet the proper criteria. The money can be moved to another IRA with out penalty.
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BessHan
member
Reged: 01/12/06
Posts: 110
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Yes, Get,that's a possibilty also. If you move the money to another type of tax deferred acct. or leave it in the new acct. you don't need to pay the taxes until it is cashed out. I was assuming from previous posts she was looking to cash out immediately. In which case, taxes (yuck!)would be taken directly from the amount set up in the acct.
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Bess H. : )
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jaiye
old hand
Reged: 10/27/05
Posts: 860
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No Penalties, just taxes at whatever tax base you would be in.
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jaiye
old hand
Reged: 10/27/05
Posts: 860
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You can cash it out without penalties but if you put it into an IRA and remove any of it before the correct age then you will have to pay penalties.
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Miranda
Carpal \'Tunnel
Reged: 06/02/05
Posts: 20822
Loc: North of Mexico
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I just cashed out 10K of an IRA we had and we did not have to pay any tax or penalties on it.
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13.1...because I am only half crazy!
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mamiwood
newbie
Reged: 04/11/05
Posts: 40
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Your right I am looking to cash out..Thanks you for keeping tabs...And thanks for the advise.
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BessHan
member
Reged: 01/12/06
Posts: 110
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I meant taxes..not really penalties.. to me, taxes are penalties. When you start off with 10k and the tax man takes 40% that's a penalty to me.
Miranda, I imagine that the source of $ in your IRA was already taxed, therefore they don't hit you twice. In the case of a 401k or something of the like, that is done pre-tax, when you liquidate, you have to then pay the taxes.
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Bess H. : )
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