Colorado QDROs are used to divide a retirement plan in a divorce or legal separation. The division is tax-free. A retirement plan cannot be divided without a QDRO.
There is no other way to divide a retirement plan in divorce or legal separation.
IRAs and annuities are not retirement plans.
Although the division of the retirement plan is tax-free, cash distributions are taxed at the Alternate Payee’s ordinary income tax rates.
As long as the cash distributions are taken from the new QDRO account, the IRA 10% early withdrawal tax penalty is not incurred even if the Alternate Payee is younger than age 59.5.
In contrast, the 10% early withdrawal penalty does apply to IRA distributions.
Distributions from Roth accounts are usually tax-free.