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Divorce, retirement and QDROs

On Behalf of | Feb 6, 2017 | Divorce, Family Law

Dissolving a marriage is never an easy or simple process. Because of this, divorces tend to demand immediate attention, which can make it hard to find the time to thoroughly consider the impact it could have on your future. However, some planning now could make life significantly easier down the road.

As couples create a life together, they tend to share many things. Their finances are usually one of those things, but like many things in a divorce, any shared resources are generally divided. If you are going through a divorce or planning on going through one, it will be worth the time to find out if a QDRO is right for your situation.

What is a QDRO?

Over the course of a marriage, couples generally amass assets and retirement plans often represent a large portion of those assets. If a couple decides to divorce, the normal course of action is to divide their assets between the two of them. Retirement and pension plans, however, generally only pay out to the sole owner of the plan. This is where Qualified Domestic Relations Orders (QDROs) become important.

A QDRO is a judicial order that divides one spouse’s retirement or pension plan between them and their current spouse, their former spouse or a dependant. This order means that the spouse’s retirement plan can be divided just like the rest of the couple’s assets.

It should be noted that QDROs can only be applied to retirement or pension plans that fall under the Employee Retirement Income Security Act (ERISA). ERISA is a federal law that sets the minimum standards for most private health care and pension plans. If the plan does fall under ERISA though, a QDRO may be a viable option.

How do you get one?

The US Department of Labor has some resources that go into detail regarding the specifics of QDROs and the application process for them, but it must have certain pieces of information before the application can be considered valid. This necessary information includes,

· The names and addresses of the plan owner and any payees

· The names and information of all plans applied to the QDRO

· The percentage of benefits that will be given to every payee

· The actual payment information (number of payments, payment schedules, etc)

Due to the amount of information these orders require, the process can become very complex very quickly. As such, it is highly recommended that you seek out the services of an experienced legal professional who specializes in this area.

They will be able to use their expertise to make sure that a QDRO is right for your situation and, if it is, that it is set up in a way that will be most beneficial for your interests.