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High-asset couples often need a QDRO when dividing property 

Those who have higher household incomes and more assets have more to negotiate and divide when they divorce. Retirement accounts are often a point of contention in high-asset Maryland divorces. 

Spouses worry about diminishing their retirement savings by splitting them. They may also worry about penalties and taxes. While people often do need to include at least some of their retirement savings in the marital estate during a divorce, they can at least eliminate taxes and penalties with special paperwork. 

A QDRO helps divide retirement savings

Making a withdrawal from a retirement savings account during divorce would trigger a penalty and possibly tax obligations. The penalty could be up to 10% of the amount someone withdraws, which can exacerbate the losses already occurring because they must split the account. 

Making a withdrawal from a tax-deferred retirement account like a 401(k) may not be the best decision during a Maryland divorce. Couples can instead use a qualified domestic relations order (QDRO) to split the account as part of the property division process. When done properly, account division with a QDRO does not lead to any penalties or taxes. 

The process does require follow-up and attention to detail. People need to sign and use the QDRO after the divorce for it to have the desired effect, as the process is not automatic. One of their lawyers must draft the document, and it won’t actually change the account until they submit it to the professional managing the retirement savings. 

Using the right tools can help divorcing high-asset couples preserve as much of their property as possible.

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