A qualified domestic relations order (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 recipient of QDRO benefits from a retirement plan must report the payments on their tax return as if he or she were a plan participant.
An individual may be eligible to roll over all or a portion of the distribution received 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 non-spousal beneficiary), they can roll it over, just as if they were the employee receiving a plan distribution and choosing to roll it over. For more information regarding how to report your rollover, please see our KB article on the subject.
How do I report my QDRO benefits?
Any payment you receive as a result of a qualified domestic relations order should be reported to you on a Form 1099-R. When you file your tax return you are required to report the 1099-R you received as a result of your QDRO. To report your 1099-R using our software, please follow the steps listed below.
- Federal
- Income (Select my forms)
- 1099-R, RRB, SSA
- Add or Edit a 1099-R
- Report the information from your 1099-R here, then press continue to save the information to your return
How are QDRO benefits taxed?
QDRO benefits are typically taxed as ordinary income for the recipient spouse (alternate payee), who is considered the plan participant for tax purposes. Although distributions are subject to income tax and may have a mandatory 20% withholding, they are not subject to the 10% early withdrawal penalty, even if the recipient is under age 59½.
What if I did not receive a 1099-R?
If you received payments as a result of a QDRO but did not receive a 1099-R reporting the income, you'll need to use a substitute 1099-R within our software. To do so, please follow the steps below.
- Federal
- Income (Select my forms)
- 1099-R, RRB, SSA
- Add or Edit a 1099-R
- Check the box at the top of the page to indicate it is a substitute 1099-R
Additional Information
Retirement topics — QDRO: Qualified domestic relations order