During divorce, retirement funds, such as those in IRAs, 401(k) plans, and Keoghs, may need to be divided. Early withdrawals from these accounts may incur penalties unless a Qualified Domestic Relations Order (QDRO) is obtained.
The QDRO directs a retirement fund's administrator to pay a specific amount to a former spouse or child. The former spouse may defer tax on the payments by rolling them into an IRA within 60 days of receipt. Payments made to a child are taxed to the plan participant.