Splitting up? Protect your retirement funds

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Splitting up? Protect your retirement funds
For some accounts, you'll need a legal tool known as a Qualified Domestic Relations Order

By Melanie Lockert
Published December 29, 2024 5:15AM (EST)


(Salon) January brings that “new year, new me” energy, particularly for those moving from a “we” to a “me." It's often nicknamed “Divorce Month” due to the high number of splits that occur. After couples get through the obligations of the holidays, they’re ready to stop pretending everything is merry and bright, grieve the end of their marriage and start untangling the assets.

For couples without prenups and divorcing in one of the nine community property states, assets accrued during the marriage may be split 50/50. The remaining states use equitable distribution, which divides marital property in a way that’s deemed “fair” — which isn’t always equal. That includes retirement funds, and for some types of retirement accounts you need a Qualified Domestic Relations Order to split things.

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What is a Qualified Domestic Relations Order?

A QDRO can come in the form of a judgment, decree or order, according to the Internal Revenue Service. It's "a legal instrument used in divorce proceedings to divide certain retirement plan assets between spouses,” said Melissa Murphy Pavone, certified financial planner, certified divorce financial analyst and founder at Mindful Financial Partners.

The QDRO must include the participant’s and alternate payee’s full name and address. Additionally, it must disclose the specific amount or percentage of the main participant or account holder’s retirement benefits that will be paid out to the alternate payee. ..................(more)

https://www.salon.com/2024/12/29/splitting-up-protect-your-retirement-funds/