Question

Sally, age 60, has received a $50,000 distribution from $100,000 she is to receive from her ex-husband's (who is age 55) qualified plan account under a qualified domestic relation order (QDRO). Which of the following statements is CORRECT regarding the QDRO and the distributed funds?

A) Irrespective of the plan document, Sally may demand an immediate cash distribution of the remaining funds from the plan trustees.
B) She may roll over the $50,000 distribution into an IRA.
C) Sally's ex-husband is not subject to an early distribution penalty in the execution of the QDRO.
D) Sally may be required to leave the remaining funds with the plan trustee until the earliest time for distributions under the plan.

Answer 1

The correct statement regarding the Qualified Domestic Relations Order (QDRO) and the distributed funds is that Sally may be required to leave the remaining funds with the plan trustee until the earliest time for distributions under the plan.

Step-by-step explanation:

The correct statement regarding the Qualified Domestic Relations Order (QDRO) and the distributed funds is option D) Sally may be required to leave the remaining funds with the plan trustee until the earliest time for distributions under the plan.

A QDRO is a legal document that allows for the division of retirement plan benefits between spouses or former spouses. In this case, Sally received a $50,000 distribution from her ex-husband's qualified plan account under a QDRO. However, she may be required to leave the remaining funds with the plan trustee until the earliest time for distributions under the plan.

Option A is incorrect because Sally cannot demand an immediate cash distribution of the remaining funds, as the QDRO and the plan document may have specific rules regarding the timing and distribution of the funds. Option B is also incorrect because a rollover into an IRA is not applicable in this case, as the distribution is not from Sally's own account. Option C is incorrect because the ex-husband is not subject to an early distribution penalty, but it is unrelated to the execution of the QDRO.