During the divorce process, a couple’s marital assets end up on the chopping block. If you have retirement assets, you might be wondering if these are subject to division as well. The short answer is, yes, you will have to divide any of the retirement assets you accumulated during the marriage. To accomplish this without incurring an early withdrawal penalty, a Qualified Domestic Relations Order, also known as a QDRO, is necessary.
More About QDROs
A QDRO is a legal order used to divvy up a vast array of retirement benefits, such as 401(k) plans, pension plans, IRAs, and other plans covered by the Employee Retirement Income Security Act (ERISA) of 1974. Only contributions and growth you earned during the marriage will be subject to division. However, if you and your spouse are not keen on the idea of dividing retirement assets, you might consider trading another asset that is comparable in value to forego this process. Under those circumstances, you would not require a QDRO during your divorce.
Additionally, if you and your spouse have similar retirement plans and both are almost equal in value, a judge might allow you to keep your respective plans. Before you embark on the process of obtaining a QDRO, ask your attorney what sort of alternatives are available to you. Pensions can be especially difficult to calculate if the participating spouse is not retired yet, so examining your options with a legal professional would be in the best interests of both spouses.
What a QDRO Can Do for You
Withdrawing money from a retirement account prior to the age of retirement will result in a 10% penalty. With a QDRO, you will not have to pay this penalty on any of the money you transfer to your soon-to-be former spouse. In addition to allowing an alternate payee to receive benefits while the participant is alive, a QDRO also allows an alternate payee to receive survivor benefits when the participant passes.
If you are far from the age of retirement, you might not think this issue is too important, but safeguarding your retirement assets is one of the most essential things you can do for your future and time passes faster than you might think.
Discuss the Details of Your Case with a Knowledgeable Divorce Attorney Today!
Divorce can be incredibly complex, especially when it comes to asset and property division. At Letterio & Haug, LLP, our divorce team has more than two decades of collective legal experience and is committed to helping clients get through one of the most difficult experiences they will endure. The decisions you make now can profoundly impact your future, so do not attempt to handle this on your own. We will guide you through this process and help you achieve the results you need to comfortably move forward.
Reach out to our law office today at (845) 203-0997 to set up a free initial case evaluation with one of our trusted family law attorneys.