Thursday, December 13, 2007

Tax Term of the Week

Qualified Domestic Relations Order- A process wherein the state court allocates an interest in a qualified retirement plan to a former spouse. Any payments made to a former spouse as the result of a Qualified Domestic Relations Order will not result in the taxpayer being assessed a penalty for early withdrawal from the plan. However, the former spouse will be taxed on the benefits when received unless the benefits are rolled over tax free into an IRA or a different qualified retirement plan.

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