Part 12 · Chapter 3

QDRO Taxation, Special Regimes, and Competing Claims

Law stated as of October 3, 2026 · QDROs and Division of Retirement Benefits

Scope and status

This chapter covers the taxation of QDRO awards (including the child-support inversion), the non-ERISA division regimes (IRAs, governmental plans, TSP, FERS/CSRS, military retired pay, railroad retirement — each with its own order type, agency, and traps), and the competing-beneficiary doctrine (Boggs, Egelhoff, Kennedy, and the plan-documents rule).

Citations are to primary authority (Code §§72(t), 402(e)(1)(A), 408(d)(6), 414(p)(11)–(12); 10 U.S.C. §1408; 5 U.S.C. §§8435, 8467; 5 C.F.R. Part 838; 20 C.F.R. Part 295; A.R.S. §§38-773 (ASRS), 38-860 (PSPRS), 38-822 (EORP), 38-910 (CORP); and controlling case law). Regime-by-regime drafting detail is in the Plan-Type Division Map in this Part's Practice Tools; ERISA qualification/design in the companion chapteri.

Sections

The opening sections of Part A are shown in full. The other sections are listed by title; their text is available to subscribers.

Part A — Taxation of QDRO Awards

A1.Spouse/former-spouse alternate payees

Part 12, ch. 3, § A1

Distributions to a spouse or former spouse alternate payee under a QDRO are taxed to the alternate payee, who is treated as the distributee — and the alternate payee may roll over eligible amounts to an IRA or another eligible plan (with §402(f) notice, 20% withholding on non-rollover cash-outs, and investment-in-the-contract allocated pro rata under §72(m)(10)). Statute: Code §402(e)(1)(A)–(B), §402(c), §72(m)(10).

A2.The §72(t) exception — and its IRA limit

Part 12, ch. 3, § A2

Distributions to an alternate payee under a QDRO from a qualified plan are excepted from the 10% early-distribution tax — the alternate payee can take cash at any age penalty-free, but only from the plan: once rolled to an IRA, the exception is gone, and IRA-to-IRA divorce transfers never had it (there is no QDRO exception for IRA distributions). Statute: Code §72(t)(2)(C). Statute: Code §§72(t)(1), (9), 4974(c).

A3The child-support inversionSubscribers
A4Roth amounts and NQDCSubscribers

Part B — IRAs: No QDRO Required

Part C — Governmental Plans and the Federal Regimes

C1State/local governmental plans — DROs, not QDROsSubscribers
C2TSP — the RBCOSubscribers
C3FERS/CSRS — the COAPSubscribers
C4Military retired pay — USFSPASubscribers
C5Railroad retirement — and Social SecuritySubscribers

Part D — Competing Beneficiaries and Preemption

D1The controlling trilogySubscribers
D2Administrator posture in disputesSubscribers

The first Part of each chapter is open to everyone. The remaining sections, with their authority and practice points, are available to subscribers and to clients of ERISA Benefits Law Group, PLLC whose engagement includes access.