Many divorcing couples accumulate an abundance of assets during their marriage. Among those assets include the investments found in retirement savings plans. On the surface, it may appear complicated in determining how much of this money is a marital asset as well as the amount of money that rightfully belongs to the spouse whose name was not on that retirement plan.
However, a convenient tool known as a qualified domestic relations order (QDRO) can untangle any perceived complications when dividing assets from retirement plans. A QDRO provides an easy way to divide assets from 401(k)s, 403(b)s, 457 plans, profit-sharing plans, pension plans and employee stock ownership plans.
Scrutinizing retirement plans
You understand that although your spouse’s retirement plans equal a certain amount, you will only receive the share considered marital assets. Money from those retirement plans is not necessarily divided equally, however, you will get your rightful share. In order to secure your portion of your estranged spouse’s retirement plan assets, you need a QDRO, ordered through the court.
An experienced and skillful attorney can draft a QDRO for you, ensuring a mistake-free document in which every detail gets attention. Retaining an attorney for this step is a wise investment.
The QDRO determines the amount of money you will receive as well as whether interest or additional payments are necessary. The interest issue especially comes into play when a divorce does not become final until weeks or months after an attorney completed the QDRO.
Consider this example. Upon the completion of the QDRO, you will receive $500,000 from your spouse’s retirement plans. However, the divorce takes another six months to complete. As a result of this delay, you will receive more money whether from interest or a market-related earnings boost during that six months.
A QDRO represents a tool that allows you to secure your rightful share of marital assets, specifically, the marital assets from your spouse’s retirement plans. It can provide for a much smoother outcome, too.