Using a QDRO to Delay Required Minimum Distributions: Examples

Ovando Bowen
Sep 21
5 min read

One of the most frustrating parts of retirement is being forced to take money out of your savings before you’re ready. These forced withdrawals are called Required Minimum Distributions (RMDs). They apply to most retirement accounts like 401(k)s, pensions, and traditional IRAs.

Here’s the kicker: the IRS doesn’t care if you actually need the money. Once you reach a certain age, you have to start pulling it out and paying taxes on it. That can mean thousands of dollars in extra taxes every year.

But what if you didn’t have to?

Enter QDROs, a little-known strategy that can help couples legally delay RMDs, keeping money growing tax-deferred for years longer. In this post, we’ll explain what it is, why it works, and walk through real-life examples so you can see the savings in action.

First, a Quick Refresher: What Are RMDs?

Congress created RMDs to make sure people don’t stash retirement money away forever without ever paying taxes.

Who it affects: People with tax-deferred accounts like 401(k)s, pensions, and IRAs.
When it starts: Generally, in your early 70s (the age has shifted over time with new laws).
What happens: Each year, you’re required to withdraw a percentage of your account. The percentage grows as you get older.
What's the amount: amounts are determined by the IRS as follows = account balance divided by life expectancy.
Why it matters: The money you withdraw counts as taxable income.

So, for example, someone with $500,000 in a retirement account might be forced to take out $18,000 in their first year of RMDs — even if they don’t need it. At a 25% tax rate, that’s $4,500 straight to the IRS.

What Is a QDRO?

A Qualified Domestic Relations Order (QDRO) is usually used in divorce to split retirement accounts. But the law does not actually require divorce to use one. By making a valid interspousal agreement under state law, filing the proper paperwork and getting a judge to sign it, a married couple can use a QDRO while staying married.

Think of it as a way to “hand off” part of a retirement account from the older spouse (closer to RMD age) to the younger spouse (further away from RMD age). Since the younger spouse isn’t required to start RMDs yet, the money can sit and grow longer — free from forced withdrawals.

Why Delaying RMDs Matters

Delaying RMDs isn’t just about kicking the can down the road. It’s about maximizing compounding growth and minimizing taxes.

Here’s why:

More Tax-Free Growth: Money inside a retirement account grows without taxes. Every extra year matters.
Lower Taxes Over Time: If you don’t need the money right away, paying later (especially in a lower tax bracket) can mean big savings.
Flexibility: You control when and how to use the money instead of the IRS dictating it.

Example 1: John and Maria

John is 70 with $500,000 in his 401(k).
Maria is 63 and still working.
John doesn’t need the money yet, but the IRS says he must start RMDs at 73.

Without a QDRO:

John must take out about $18,000 his first year.
At a 28% tax rate, that’s roughly $5,000 in taxes.
Over 5 years, he’ll withdraw around $100,000 and pay about $25,000 in taxes — money they didn’t actually need.

With a QDRO:

John uses a QDRO to move the 401(k) into Maria’s name.
Maria doesn’t have to start RMDs until she turns 73 (10 years away).
Instead of draining $100,000, the account keeps growing tax-free.

If the account earns 5% annually, that $500,000 could grow to more than $814,000 by the time Maria turns 73. That’s $314,000 of additional growth — and years of delayed taxes.

Example 2: Robert and Carol

Robert is 72 and ready to retire with a $300,000 pension.
Carol is 65 and retired.
Robert doesn’t want to start RMDs yet, but he has no choice.

Without a QDRO:

He must take about $11,000 annually.
At a 25% tax rate, that’s $2,750 per year to the IRS.
Over 7 years, that’s nearly $20,000 lost in taxes.

With a QDRO:

Robert transfers the pension income stream to Carol.
Carol delays RMDs until she reaches the required age.
They save those withdrawals and let the money stay in the account longer.

Result: more flexibility and potentially tens of thousands more in retirement savings.

Example 3: The High-Earner Couple

Tom is 69 with $700,000 in his 401(k).
His wife Lisa is 61, still working in a high-paying job.
Tom is about to hit RMD age, but Lisa’s income already puts them in a high tax bracket.

Without a QDRO:

Tom’s forced withdrawals push them into an even higher bracket.
They pay 30% or more on RMDs they don’t need.

With a QDRO:

Tom shifts part of the 401(k) into Lisa’s name.
No RMDs required for another 10+ years.
When Lisa eventually retires, their overall income (and tax bracket) may be much lower.

Result: instead of paying 30% taxes now, they might pay 15–20% later. On a $700,000 account, that’s a huge difference.

Is It Legal?

Yes. The IRS and Department of Labor both confirm that QDROs can apply to spouses, not just ex-spouses. Federal courts have consistently ruled that as long as a QDRO meets the technical requirements, plan administrators must honor it.

The key is having it drafted properly by an attorney and approved by a judge. This isn’t a do-it-yourself project.

What Are the Risks?

Divorce Risk: Once money is transferred, it belongs to the other spouse. This is not for newlyweds.
Death Risk: If the receiving spouse dies, they control who inherits.
Costs: Court filings, attorney fees, and plan administrator fees can run in the thousands.
State Laws Differ: Some states allow more spousal flexibility than others.
Judge Might Not Sign: Because this is a unique strategy the judge in your county may not feel comfortable and want to risk signing the QDRO- like in life, when it comes to the courts, there are no guarantees.

Who Should Consider This Strategy?

A QDRO to delay RMDs can be especially helpful for:

Couples with a large age gap.
Retirees who don’t need their RMDs yet.
Families wanting more tax-free growth.
High-income couples looking to avoid bracket creep.

The Bottom Line

Required Minimum Distributions can feel like the IRS forcing your hand. But with a QDRO, couples may be able to push back — legally. By shifting accounts to the younger spouse, you can delay withdrawals, reduce taxes, and give your savings more years to grow- leaving the financial planning in your hands.

It’s not for everyone, and it comes with costs and risks. But for the right couple, the payoff can be enormous.

Key Takeaways:

RMDs are mandatory withdrawals that trigger taxes.
A QDRO lets couples delay RMDs by moving funds to the younger spouse.
Real-world examples show savings of tens of thousands of dollars.
It’s legal, but requires proper drafting and court approval.
Best suited for couples with age gaps, high savings, or strong tax planning needs.

Because this is a unique financial planning and retirement planning strategy, most attorneys (and financial advisors) are unaware of what the federal law actually says. Make sure to speak to an experienced professional like those at Ovando Bowen LLP to see if this strategy is right for you.