Where Does the QDRO Fit Into the Divorce Process?

If you are going through a #divorce, the process and procedures can be daunting and seem incomprehensible at times. From the first court filing to the final settlement agreement and everything that happens in between, it is no wonder that so many divorcing couples feel confused about what is happening around them.

One area that brings particular stress and misunderstanding is the division of the marital estate, especially when it comes to dividing things up to offer financial security for both spouses. While your lawyers will help you figure out where you stand financially today, thinking about financial stability in the future can involve complex calculations.

One area where this is especially true is retirement accounts. Longtime homemakers, who remained out of the workforce during the marriage, may not have their own retirement resources. In those cases, dividing the other spouse’s retirement account may be necessary to provide adequate financial support after the divorce. This is where a Qualified Domestic Relations Order (QDRO) comes in.

These specialized legal documents are drafted by your attorney (or a specialist in #QDRO preparation), and signed by the court. Once the legal document is complete, it is submitted to the plan administrator at which point the asset is divided and the non-employee spouse gets their share of the account. It can then be rolled over into another qualified plan or IRA with no tax consequences. It can also be distributed, but taxes must then be paid.

For a great analysis of all the financial considerations to make during your divorce, read this article from Moneywatch.

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If you have a QDRO in your future, visit our website to learn more about these retirement account division tools and the services we provide.