Distribution of QDRO rollover

[Richard Anderson]

A spouse rolls a QDRO distribution to another qualified plan. If the spouse takes a distribution from the current plan, can that distribution be from only the QDRO portion of her total plan assets? Does the QDRO exception to the 10% early penalty still apply? The plan allows in-service distribution of rollover assets. She has QDRO rollover, and non-QDRO rollover assets in the plan. These have been seperately accounted for as differrent sources. Can she take a distribution of just QDRO rollover money? Or should a distribution of rollover be pro-rated as part QDRO and part non-QDRO? The plan document is not much help, only says allows in-service distribution of rollover account.

[QDROphile]

Once the QDRO money is rolled over into a plan, the QDRO source is irrelevant. It is simply a rollover. So the recipient plan document controls whether or not a distribution is available, and the plans general rules about rollover amounts apply. There is nothing special about the QDRO rollover. So, among other things, the 10% penalty will apply unless an exception other than the QDRO exception applies. I don't see any point in dividing the rollover account into subaccounts

[Richard Anderson]

Thanks QDROphile;

That's what I thought. I just took over this plan. It looks like the prior administrator believed that the QDRO money could be distributed after rollover without the 10% penalty. That's why they kept the QDRO rollover as a seperate source, so that she could take distributions without the 10% penalty. In fact, she has been taking distributions for the past 3 years, and the 1099's were coded as "early with exception". Those distribution total about $400,000. 10% of $400,000 is $40,000. (sigh) I love takeover plans.