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QDRO: Distributions

The importance of understanding your QDRO distribution cannot be overemphasized. A QDRO distribution is different than other types of distributions, based on certain sections within the Internal Revenue Code (IRC).

Your Distribution Options

Should the Plan allow for an immediate lump-sum distribution, you have several options to consider for your QDRO distribution: (1) you can roll your distribution into a qualified IRA or other retirement account and avoid being taxed on the distribution, (2) take a direct distribution from the plan and only pay applicable income tax, 20% of which is required to be withheld, or (3) receive a portion in cash, understanding that 20% will be withheld, and rollover the remainder to an IRA or other qualified account. QDRO distributions are not subject to tax penalties if a direct distribution is made to you from the plan, however, again there is a 20% mandatory withholding for normal income tax purposes. Of course, a direct distribution would be taxed as ordinary income in the year received. This is why it is important for you to consult an investment professional familiar with these types of distributions.

Voit & Hamilton, L.L.C. is a registered investment advisory firm that manages investments for 401(k)'s, pension/profit sharing plans, and most importantly individuals. Voit & Hamilton, LLC's role as an affiliate of Voit Econometrics is to advise individuals on such distribution options and the underlying investment selection. It is in this capacity that we generally recommend a rollover to an IRA brokerage account, as your most advantageous option, providing you with the most control and investment choice. This, as opposed to rolling the proceeds into another employer's qualified plan which may limit your investment choice to a few options or subject you to the terms and conditions of the plan. In addition, since you receive no employer matching contribution on rollover funds, it may not seem financially logical to put your money in another employer's plan and subject it to the limitations cited above, or leave your QDRO distribution in an existing plan. Aside from this point, many plans will not take receipt of QDRO distributions. Keep in mind, an individual can have several different IRA's or IRA qualified investment vehicles.

Voit & Hamilton, LLC manages investments, both domestically and internationally. For individual clients, we establish portfolios specifically to satisfy your goals either for growth or income. Investments range from U.S. government bonds to international stocks to many of the available mutual funds.

Aside from investment analysis, we generally work with you in providing necessary financial analysis for retirement, estate planning, and/or insurance planning. Specifically, the process we will follow in establishing an investment management account is as follows:

Investment Management Process - Larger Accounts

The first step in the process is to provide our office with a completed Investment Tolerance Survey Form, Investment Advisory Agreement and retirement account rollover paperwork. Please find these documents enclosed for your review.

* An Investment Policy Statement will be drafted which will outline the basis for our recommendations, the dollar amounts to be invested to achieve adequate diversification, an explanation of each recommended investment (or type of investment) and a breakdown of our fee.

* Next we would discuss and finalize the implementation of your portfolio and also complete any remaining paperwork.

* Periodic reviews are performed quarterly in which you will be provided with an Investment Holdings Report. The Investment Holdings Report includes:

  • Portfolio Appraisal
  • Unrealized Gain/Loss Report
  • Realized Gain/Loss Report
  • Performance Report
  • Interest, Dividends, and Expenses Report
  • Transaction Summary

We will set up the portfolio with the objective determined by the information we receive from you and our discussions. The precise set up of the account will also be dependent on information you have dictated to us through the Investment Survey Form.

All of our accounts are registered in the names of our clients only. Voit & Hamilton, LLC has only limited power to execute trades approved by our clients, to receive duplicate statements, and to deduct management fees from the account. All securities in which our clients invest are publicly registered and listed daily in most local newspapers. The firms, acting as custodian, in which these securities are held are SIPC insured.

Voit & Hamilton, LLC would deduct fees quarterly amounting to .25% (.0025 x Total Investment Assets) of the amount of money under management. We also typically charge a one-time investment planning fee of .25%. Unlike many other brokers or Investment Managers that are inaccessible, you will have direct access to the person in charge of your portfolio.

Investment Management Process - Relatively Small Accounts
Voit & Hamilton, L.L.C. provides a mutual fund portfolio which can be funds you select, funds that mirror those funds that you may have been comfortable with within your own 401(k), or simply those funds that meet your goals and objectives.

Mutual Fund Portfolios are for those investors who are interested in mutual funds, but would prefer to be relieved of asset allocation decisions and the fund selection process. We have extensive experience in evaluating mutual funds and matching the investor's needs with appropriate fund selections. Voit & Hamilton L.L.C. uses a long-term investment strategy built on a foundation of asset allocation and global diversification. We seek to reduce volatility by investing in a variety of asset classes and investment styles that provide international diversification. Your mutual fund portfolio may include some of the following fund families:

Fidelity
T Rowe Price
American Funds

Vanguard                     Funds

Mutual Fund Portfolio Construction & Screening Criteria

  • Screen for mutual funds based on a forecast of Alpha (a measure of management capability).
  • Emphasis on low cost-index funds are considered.
  • No more than eight funds used
  • Rebalanced quarterly
  • Forecasted performance takes precedence over past performance

If you would like to Voit Hamilton to simply examine your Investments objectives, please complete an Investment Survey Form and submit it to Voit & Hamilton, L.L.C., by email to vecon@snworks.com .

For more information on Investments and Investment Services offered, please visit Voit & Hamilton's website at:

www.voithamilton.com

or email:  todd@voithamilton.com

 

Information presented here is for informational purposes only and should not be acted upon without first consulting with a qualified investment advisor or Voit & Hamilton, L.L.C.

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