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Dividing employer-sponsored retirement funds in a divorce

When married couples in Kentucky and around the country divorce, one of the most valuable assets in their marital estates is often the funds that have accumulated in an employer-sponsored retirement plan. To divide this money, federal law requires a family court to issue what is known as a domestic relations order. Once this court order has been issued, it must be accepted by the retirement plan. The document then becomes known as a qualified domestic relations order. This process only applies to retirement plans that have been sponsored by private employers. Public sector workers must obtain a different kind of court order to divide retirement funds in a divorce.

QDROs can be prepared during or after divorces

QDROs are usually dealt with during divorce proceedings, but they can also be filed months or even years after a divorce settlement has been accepted by the court. People often take this step after learning that a divorce decree alone is often not sufficient to divide retirement funds. In order to receive this money, a former spouse needs a QDRO that names them as an “alternate payee.” This entitles them to retirement benefits while their former husband or wife is still alive and survivor benefits if they pass away.

Time is of the essence

While there is no time limit for submitting a QDRO to a retirement plan, spouses would be wise to act quickly. If the beneficiary retires and begins to receive benefits before the QDRO is submitted, only money that has not already been paid out will be divided. When beneficiaries divorce more than once, multiple QDROs may be issued. It is important to contact the retirement plan before drafting a QDRO as the wording on the document must be consistent with the plan’s rules.

Making sure that retirement funds are not overlooked in a divorce

If you are thinking about filing for divorce, a family law attorney with experience in divorce cases may urge you not to overlook retirement assets even if you are young. If your divorce is finalized and these assets are not accounted for, you may have to reopen the divorce in order to file for a QDRO.

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