Dave Begley is the only attorney in Nebraska – and one of the few in the country – who knows how to do an In-Marriage QDRO®. What is an In-Marriage QDRO? I also call it The Happily Married Couple QDRO as it allows a married couple to transfer pre-tax money from one spouse to the other spouse without a tax penalty and, in so doing, accomplishing some things that can’t be done any other way. The couple remains married and can continue to work for the employer (and collect matching contributions) with this special transaction.
An In-Marriage QDRO transfers ERISA money (usually 401(k) or 403(b) funds) to an IRA for the other spouse. The transferred money retains its tax-qualified status. The transfer, however, doesn’t need to be an IRA. The transfer can be to cash and be used for any purpose the couple wants: to pay for a second home or a major remodel, pay debt rather than borrowing money from a 401(k), pay college tuition for a child or grandchild or satisfy a charitable pledge with pre-tax money and then claiming a charitable deduction.
Some married couples want to diversify their financial holdings and purchase financial products that are not offered by the ERISA plan administrator. That problem is solved with the In-Marriage QDRO.
Two of the more popular uses for the In-Marriage QDRO are deferring or accelerating Required Minimum Distributions if the spouses aren’t very close in age. Purchasing real estate in a self-directed IRA is an exciting and compelling use of the In-Marriage QDRO.
If one spouse works for the government and wants to retire early and at full benefits, “air time service” can be purchased from the pension plan using the In-Marriage QDRO.
The “killer app” of the In-Marriage QDRO is transferring money between spouses when one spouse is in a nursing home. In one case I am familiar with, the married couple was able to save over $23,000 per year. That’s legal magic!
I haven’t listed all of the wonderful – and legal – benefits an In-Marriage QDRO can do for a married couple. If you are married or work as a financial advisor, please call or email me for a short presentation on this innovative legal service.