Everyone knows it is important to plan for the future. An essential component of this plan for the future is making sure your retirement is stable and properly funded. When you are married, both you and your spouse will contribute to the plan for the future, whether that is with a monetary contribution or by supporting each other to help reach new career goals. During a divorce, retirement, like other assets, will have to be divided. If you are dividing specific types of retirement accounts, you may need a QDRO.
A Qualified Domestic Relations Order, or “QDRO,” is often the best option to divide your retirement account. When you are going through a divorce, the court will make an equitable division of your marital assets. In general, the assets that you accrue in your retirement accounts during your marriage are considered marital property and will be divided during your divorce. Note that this is true even if your spouse’s name is not associated with your retirement accounts. However, division of a retirement account can incur severe tax and other penalties, depending on how to decide to divide the contents of the account. For example, simply cashing out the contents of your 401(k) and giving your spouse his or her share can mean that you have to pay hefty taxes and penalties. A QDRO will help you avoid these problems. With a QDRO, a court will issue an order to the account administrator requiring it to roll your spouse’s share of the account into a separate account. This will effectively divide the contents of the account by creating two accounts. This will prevent you from having to withdraw the contents of the account first, thereby avoiding the negative financial consequences of liquidating your account.
A QDRO is typically a relatively short document that is entered by the court in conjunction with or shortly after the entry of your final divorce decree. Some financial institutions have specific preferences for the contents of a QDRO, and it is usually helpful to work in conjunction with the financial institution to facilitate the entry of the order. Note that a QDRO orders the financial institution to take specific steps, as opposed to your former spouse. Especially when you are working with an uncooperative or even absent spouse, having an order that bypasses your former spouse can help speed up and streamline the process to get the retirement account properly divided.
We can help you with all types of issues concerning property division. Contact us today for a consultation to discuss your divorce.
Are you interested in seeking an annulment? If so, contact Williams Law Group, LLC right away. Our family law attorneys will review your case to determine if an annulment is an option. If it is, we will guide you through the process and ensure you make the best decisions for your future. Call our office at (908) 738-8512, email us at firstname.lastname@example.org, or contact us through our confidential online form to schedule a consultation