Obtaining Colorado Maintenance (Alimony) from Retirement Plan Assets
Under federal pension plan law (ERISA), retirement plan assets can be tapped through the use of a QDRO to get maintenance (alimony) payments.
A QDRO can be used to collect Colorado maintenance (and child support) even if an earlier QDRO was used to split a retirement plan for the benefit of a former spouse.
A defined benefit pension plan can be used to collect a stream of monthly maintenance payments.
A defined contribution plan is a good asset to obtain a lump sum for maintenance arrears.
This is true of the law of all states, not just Colorado.
The Tax Treatment is Similar to the Standard QDRO
Under the traditional QDRO which is used to divide martial assets, the income tax is paid by the former spouse who received the QDRO account, at the time that the money is withdrawn.
Under the tax law, maintenance payments are tax deductible to the payor and taxable income to the payee.
As a result, the tax treatment of a maintenance QDRO is similar to that of a standard QDRO used to divide marital property.
A maintenance QDRO is particularly effective if an arrears is owed.