Do I Need a QDRO for My Divorce?
If you have any retirement assets and are in the process of getting a divorce, chances are you have heard of a qualified domestic relations order (QDRO). Unless you and your spouse can work out an arrangement where you keep your respective retirement plans and offer other marital assets in their place during the asset division process, you will need a QDRO. Moreover, given the complexities you will face during this process, it is also crucial that you hire an attorney with extensive experience in handling such cases.
Using a QDRO to Divide Retirement Assets
A QDRO allows spouses to divide assets held in retirement plans, including 401(k) plans or pension plans, without incurring an early withdrawal fee. Only the assets you accumulated in your retirement plan during your marriage is subject to division. Anything you earned or contributed before tying the knot is considered separate property and will not end up on the chopping block.
A QDRO is only applicable if the is covered by the Employee Retirement Income Security Act of 1974 (ERISA) since, under this act, a participant cannot legally assign a portion of his or her plan to another individual.
Receiving Retirement Benefits Through a QDRO
After a judge awards you a portion of your spouse’s retirement assets, you can decide how you choose to receive these assets. It is crucial to understand the consequences of your choice, so you do not end up finding yourself in a financial predicament.
Here are some of your options:
- You can receive the retirement assets in the form of an annuity. Since you will receive it in regular installments, you can spread out the tax burden.
- If you want the money now and can afford to pay the taxes on it, you can take your spouse’s retirement assets as a lump sum.
- If you are not in a hurry, you can keep the assets in a qualified retirement plan, giving it the chance to continue to grow until you retire.
- You can also choose to leave your portion of the assets in your former spouse’s retirement plan and retain control over how you choose to invest it. However, you must specify this in your QDRO.
Reach Out to Our Knowledgeable Legal Team Today!
If you are getting a divorce, you and your spouse must divide all marital assets, including retirement plans. Given the difficulties of this process, it is imperative to hire an experienced legal advocate to help you navigate the process. At Dale L. Bernstein, Chartered Law Office, our knowledgeable family law attorney will guide you through every step and help ensure your interests are protected. Our attorney has provided exceptional legal representation for countless clients for more than 33 years and is backed by a proven history of success.
Call our law office today at (727) 312-1112 to set up an initial consultation.