Avoid This Costly Mistake When Dividing Retirement Accounts in Divorce

Did you know that when you equalize retirement accounts in a divorce settlement, you strip away a huge advantage for your client? You may have the best of intentions for your client. You may think you’re doing the right thing – the “less expensive” thing. But unfortunately, what you’re really doing is egregious.?

Here’s the deal: If you divide retirement funds through a QDRO, the recipient gets a one-time opportunity to make a penalty-free withdrawal—even if they’re under 59?.?

But when you equalize, that opportunity vanishes. When you roll the funds into an IRA, any withdrawal before 59? gets slapped with a 10% early withdrawal penalty.?

That’s money your client could’ve used—penalty-free—if you’d done it right.?

In divorces, cash is king.?

Your client might need immediate access to those funds for a down payment on a house, a fresh start, or just to stay afloat.?

By equalizing, you’re closing that door. You’re costing them options, flexibility, and, frankly, a chance to get on with their life.?

This isn’t about your convenience; it’s about giving your client the best shot.?

A QDRO means flexibility—letting them access funds without that 10% penalty if life throws a curveball.?

And they only get this chance once.??

Equalizing does not simplify. It does not save your client money. You are adding more fees and more complexity to what is already complicated. Equalization does not apply to the division of retirement plans.?

Ready to do it right? Register your firm for my FREE, 60-minute masterclass: “Mastering Settlement Language for Defined Contribution Plans: Equalization is Not One-Size-Fits-All". ?

It’s not just a class. ?

It’s your first step to transforming how you handle retirement splits and ensuring your client’s financial future.?