QDROs and other issues related to retirement plans in divorce

On Behalf of | Jun 30, 2015 | Property Division

In some cases, property division in divorce is pretty straightforward. It’s clear what can be characterized as marital assets, which can then be divided fairly between the spouses.

In other cases, however, differentiating between community property and separate property requires much closer analysis, and the spouses may have to negotiate for a portion or all of certain assets to reach a fair settlement. Retirement plans are one kind of asset to be considered in divorce negotiations.

Generally, unless a prenuptial agreement says otherwise, retirement plans are subject to property division in divorce. Often these accounts consist of tax-deferred savings, so it is important to consider the tax implications when splitting a retirement plan between divorcing spouses.

Sometimes people need to withdraw retirement funds to cover immediate costs related to divorce, and sometimes it makes more sense to keep the funds intact or roll them over into another account. An experienced family law and property division attorney can advise you on the decision that makes the most sense for your situation.

The law allows for someone other than a retirement plan participant to be named as a person who has a right to retirement funds. With a Qualified Domestic Relations Order, an alternate payee can be officially recognized, and often QDROs are used in the division of retirement funds between divorcing spouses.

The law also specifies that only a retirement plan participant’s spouse, ex-spouse, child or other dependent can be named in a QDRO as an alternate payee.

For more on negotiating for a fair divorce settlement, please see The Shapiro Law Firm‘s section on property division.