I have a question for me. My lawyer will be preparing a QDRO for me. He is adamant that any money I keep and don't roll over is penalized at the 10%. I know that is incorrect. I will be preparing my tax return so that's no problem. BUT I used to work for a CPA that was a real stickler for QDRO's being prepared by attorneys knowledgeable of tax law. My question is, do I need to be concerned that he is somehow going to prepare it wrong so that I'm penalized????
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Just a couple of thoughts ...
If the lawyer doesn't know accurate information about this, what else are they wrong about? It might not be the best choice of a lawyer.
You could insist on the lawyer signing a contract with you that the QDRO meets the definition in IRC ยง414(p)(1), and the lawyer be responsible for any consequences if it were to not meet that definition. That way, if something is done incorrectly, the lawyer would be responsible for any penalties. -
Thank you so much, that is a great idea. I have already paid this lawyer a contracted amount and have some left the he either works off or just keeps! I would prefer to not have to pay more to someone else since I have an unused balance with this one. I'm thinking about using my balance and being very careful.Comment
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The exception to the 10% penalty for distributions under QDROs lies in IRC Section 72(t)(2)(C). Specifically:
72(t)(2)(C) Payments to alternate payees pursuant to qualified domestic relations orders Any distribution to an alternate payee pursuant to a qualified domestic relations order (within the meaning of section 414(p)(1)).
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