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Robin D.
Robin D., Senior Tax Advisor 4
Category: Family Law
Satisfied Customers: 13609
Experience:  15years with H & R Block. Divisional leader, Instructor
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I've been married 17 years to Joseph

Customer Question

Hello:
I've been married 17 years to Joseph XXXXXX. We have lived separately, I in CA, he in NY. He intends to divorce me and retire from his job as a lab tech in Rochester in July.
I am a Waldorf teacher and presently being treated with chemo therapy as a terminal cancer patient and receive a total disability payment of $1300 per month. I have no other source of income and no pension or savings.
The monthly payment I might expect to receive from Joe's pension upon his retirement seems preferable to me than the payout as a lump sum Joe wants. And I have no idea what the Special Tax Notice is regarding the lump sum pay out.
Can you give me an idea of what is to my advantage. My own inclination is to not sign off on the payout.
Thank you,
Ilian XXXXXX
Submitted: 1 year ago.
Category: Family Law
Expert:  Robin D. replied 1 year ago.
Hello,In a divorce if you receive monthly payments form his pension those will be taxable to you. There is another option for individuals and that is to have a rollover of the lumpsum amount into another deferred account using a QDRO. You can then receive as much per month as you wish to have.A "qualified domestic relation order" (QDRO) is a domestic relations order that creates or recognizes the existence of an alternate payee's right to receive, or assigns to an alternate payee the right to receive, all or a portion of the benefits payable with respect to a participant under a retirement plan, and that includes certain information and meets certain other requirements.A QDRO is a judgment, decree or order for a retirement plan to pay child support, alimony or marital property rights to a spouse, former spouse, child or other dependent of a participant. A spouse or former spouse who receives QDRO benefits from a retirement plan reports the payments received as if he or she were a plan participant. An individual may be able to roll over tax-free all or part of a distribution from a qualified retirement plan that he or she received under a QDRO. If a person receiving QDRO payments is either the employee's spouse or former spouse (not as a nonspousal beneficiary), then he or she can roll it over, just as if he or she were the employee receiving a plan distribution and choosing to roll it over. There is no tax on the full amount rolled over. YOu would be taxed only on the amount you actually receive each month.