QDRO Distributions

L1: QDRO DistributionsI have a client who began his 72(t) distributions at age 52 1/2. He was recently divorced and is required by the QDRO to transfer 35% of his account to his ex-wife. Because of this, he would like to reduce his 72t distributions to try to maintain his accountbalance if possible. I am of the understanding that he can make the change due to the QDRO, my questions are these:When recalculating the monthly amount do I base it on the current SEPP interest rate or can we use the higher rate from 2006 (when he started the distributions)?Is there anything else that should be considered to avoid potential problems?2010-04-01 18:48, By: Tim, IP: [206.221.230.92]
L2: QDRO DistributionsTim:Bad news! The only two exceptions to changing a 72(t) distribution, in your case removing35% of the account value,from the accountis (1) death and (2) disability. QDRO is not an acceptable excuse for taking excess funds out of the account.Unfortunately most attorneys and judges don’t know this little fact. The best avenue is to have your client’s attorney negotiate a change to the QDRO so the spouse receives 35% of the income from your client each month, quarter, year or whatever the distribution cycle isas the 72(t) pays out. Once the 72(t) requirements have been satisfied (5-years of distributions and his age 59 1/2), then split the account per the agreement. Otherwise when the 35% value is removed, the plan will automatically be busted and the excess tax and interest will be owed.Sorry about that.Jim2010-04-01 19:13, By: Jim, IP: [70.167.81.119]