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originallawyer, Family Law Attorney
Category: Family Law
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Experience:  7+ years of experience in divorce, custody battles and mediation.
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If Fidelity says they can split a couples IRA without a QDRO

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If Fidelity says they can split a couples IRA without a QDRO and still have no tax penalties, why would the spouse need a QDRO? Are there any other protections in a QDRO?
Often, large investment companies will have no trouble following a court order that states exactly how a IRA should be divided. I am surprised that Fidelity doesn't require one though, simply for the reason that QDROs are usually far more detailed than the order that divides the retirement account.

It's always better to have a QDRO that specifically states exactly how an IRA is to be divided. If there is no QDRO, and the order is not specific enough (is the IRA divided by a percentage or by dollar amount, what date is used as the separation date, etc) and Fidelity isn't sure what the Judge actually ordered, you'll have to go back to get the Judge to clarify it.

Fidelity actually has their own site regarding QDROs: and I think it would be in your best interest to have one drawn up and have a Judge sign it. It shouldn't be that much extra since you basically just need to fill in the blanks, and then all parties are protected.
originallawyer, Family Law Attorney
Category: Family Law
Satisfied Customers: 763
Experience: 7+ years of experience in divorce, custody battles and mediation.
originallawyer and 4 other Family Law Specialists are ready to help you
Fidelity is correct. A qualified domestic relations order (QDRO), as defined in 26 USC § 414(p), applies only to employer-sponsored pension and retirement plans. An Individual Retirement Account (IRA) is NOT an employer-sponsored, so division of an IRA incident to dissolution of marriage does not require a QDRO.

HOWEVER, an IRA may be divided incident to dissolution of marriage, with all or a portion being TRANSFERRED to the account owner's spouse, without the division and transfer being deemed as a taxable IRA distribution, if done pursuant to "a divorce or separation instrument," which is defined in subparagraph (A) of section 26 USC § 71(b)(2) as "a decree of divorce or * * * a written instrument incident to such a decree.”

If your divorce judgment specifically identifies the IRA that is to be divided and transferred and specifies the details of the division, the divorce judgment will generally be sufficient, coupled with such other procedure requirement that may be imposed by the IRA custodian.

CLICK HERE for an article the fully explains and details this topic.

Regarding Fidelity IRAs.......
Fidelity requires that the transferee (recipient) spouse have a Fidelity IRA, so that the funds can be transferred (for example) from husband's IRA to wife's IRA. If wife does not already have a Fidelity IRA, will need to set one up.

To accomplish the transfer of a Fidelity IRA, you simply need to follow the instructions as explained at Fidelity's website. CLICK HERE to get to the website. (You will note that Fidelity makes no reference to the need for a "QDRO" in its instructions and procedures for transferring a Fidelity IRA pursuant to a divorce judgment.

Hope this clarifies. I wish you well.

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