Poorly drafted divorce agreements involving dividing retirement benefits such as 401ks, IRAs and pensions are a common issue resulting in post-divorce litigation. Sometimes, specific details are not addressed in the agreement or a step in the execution process is overlooked. Unfortunately, not getting it right the first time can lead to the loss of valuable benefits or costly litigation to correct mistakes.
What exactly is a QDRO?
When couples divorce, there may be retirement accounts to divide such as 401Ks, pensions and IRA’s. While the division of an IRA is fairly straightforward, 401Ks and pensions are governed by federal law and require a Qualified Domestic Relations Order or QDRO to divide the funds.
A Well-Drafted Agreement
Although you and your spouse may agree to split all retirement funds 50/50, it is important to address specific issues related to the disbursement of retirement funds in the agreement. Issues might include whether changes in the value between the date of divorce and the date of actual division are included in the benefit; if the ex-spouse has to wait for the employee to retire to access the benefit; or if lump sum withdrawals can be made. There are many issues that can be resolved ahead of time that can be spelled out in the agreement if you know what questions to ask. Working with an experienced divorce lawyer to draft a comprehensive agreement is crucial to avoid a loss in benefits and future litigation.
Executing a QDRO – Avoiding Holes in the Process
When the QDRO is drafted and approved by the lawyers, the plan should be sent to the retirement fund administrator to ensure that the company can in fact execute the order’s provisions. If the order doesn’t conflict with the plan rules, the plan administrator will likely approve it and send it to the judge for signature. A signed order will then be returned to the plan administrator for execution and the divorcing parties and their respective attorneys should be provided notification to ensure the asset has been properly divided – any missteps along the way can result in costly legal fees to set it right or possibly the loss of benefits.
Contact Our Waukesha Marital Property Division Lawyers When Retirement Funds are at Stake
A comprehensive, well executed QDRO will ensure that valuable retirement assets are divided properly and that all divorcing parties get their fair share. If you are considering divorce and have assets such as retirement accounts, speak to an experienced marital property division lawyer for help. The Waukesha divorce lawyers of Probst Law Offices can provide you with a free initial consultation so that you can make informed decisions regarding the division of marital assets or other family law issues you may have.