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michaelp5792
New Member

How to treat pension payments paid directly to spouse before QDRO processed

My ex and I separated in 2019.  Under the separate maintenance agreement & decree, she receives both alimony and also half of my civil service government pension (as an equitable division of property). I pay the alimony to her directly, and since our decree was issued after 2018, it is not deductible.  A court order was prepared (like a QDRO) to split the federal pension, so that she'll be paid her half directly by the government and get her own 1099-R. The agreement & decree provided that "Until the QDRO is fully executed with the Pension benefit being received by Wife through the QDRO, Husband shall transfer to Wife $2,100 each month." This $2,100 was an estimate of what her half of the pension would be, which was calculated under a complicated formula. The federal government took 6 months to process the QDRO!  I directly paid the ex half of my pension for six (6) months until the QDRO finally processed (Jan - June).  My 1099-R from the government has been issued, and shows 3/4 of my original pension entitlement (so, hers will be for 1/4, even though she got half!). In other words, OPM prepared the 1099-R to reflect only the payments to my ex that they sent her directly, without any provision for the payments I made to her before the QDRO was processed. What about the six (6) months I paid directly to the ex for Jan thru June?  Can I deduct those payments to her? If so, how do I reflect them on my tax forms? Also, can I give her a 1099 for the half of my pension I paid directly to her those six (6) months? What type of 1099? It seems crazy that I should have to pay the tax on 6 months of her pension income just because they were slow to process the QDRO and I had to pay her directly.

2 Replies
Cynthiad66
Expert Alumni

How to treat pension payments paid directly to spouse before QDRO processed

 

This is how you can do this in Turbo Tax

 

1) You would need to report the full amount on his tax return to match the 1099-R you received.

 

 If the amount you paid her is not designated as alimony in your divorce documents he can report it in TurboTax as Less Common Income> Other Reportable Income.  In that section you can put in a description and the amount as a negative amount.

 

2) She can file the income you received for the first 6 months, as a substitute 1099-R in the Retirement Plans Section of TurboTax.

 

OR

 

You can petition the plan administrator to issue a corrected Form 1099R.  You can also enter the amounts that are relative to you and print and mail the return with the documentation to support your return.  It would help if you can show that your Ex has been made aware of the amount and has reported the amount as receiving a 1099R.  You can also, make an agreement with your spouse to just include the amount on your return and have her reimburse you directly for the amount of taxes relative to the inclusion of income that is not yours.

 

An approved DRO is known as a Qualified Domestic Relations Order (QDRO). Under federal laws, qualified plans like defined benefit plans, ESOPs, 401(k) plans, and profit-sharing plans require a QDRO in order to distribute benefits to an alternative payee. Once a DRO has been determined to be qualified, notification of approval is sent to the attorney who in turn submits their final revisions to the court for a judgment.

 

An official copy of the court’s judgment is passed on to the plan administrator to begin processing the retirement plan benefit. A QDRO is a mandatory order that must be followed to the teeth and honored by the employee’s company or plan administrator. However, in the event that a DRO is erroneously judged as qualified, the QDRO can be taken to court to be corrected or changed.

michaelp5792
New Member

How to treat pension payments paid directly to spouse before QDRO processed

Thank you for the guidance!  

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