Dividing a Life Insurance Annuity With a QDRO

Annuities are issued only by life insurance companies.

They are very popular financial sale tools because the insurance salesman (also known as a financial planner) earns large commissions through the sale of an annuity.

Almost always a Colorado divorce QDRO is required to divide an annuity.

After the annuity is processed, some life insurance companies do actually divide the annuity into separate accounts so that the Alternate Payee’s portion is split off from the annuity owner’s portion.

However, some some life insurance companies do not split off the Alternate Payee’s portion. Instead they just mark up the annuity contract to show that an Alternate Payee is entitled to a portion of the annuity.

I have also seen some annuity QDROs treated as taxable distributions when the QDRO is processed by the life insurance company.