People sometimes worry about how they’re going to retire after they get divorced. They know that they’ve been saving up jointly with their spouse for retirement, and they also know they have to divide assets if the marriage ends. But they may be worried that they’re not going to get their fair share of those retirement funds, perhaps because they are in an employer-sponsored pension plan or a retirement fund.
Fortunately, there are ways to divide these types of assets, even if they’re only going to start paying out in the future – after your spouse retires. It’s important to know how a qualified domestic relations order (QDRO) works and what it may be able to do for you.
What is a QDRO?
A QDRO is an order that the court makes stating that a financial account – like a pension – needs to be divided between multiple parties. In this case, it would simply be you and your spouse. But the order modifies the existing arrangement so that payments that would have only been made to one person are instead divided between all qualified parties.
The QDRO can also specify the percentage. For instance, perhaps the person who owns the plan will be allotted 75% of each monthly payment, while the other 25% will have to be paid to their ex. This is based on the percentage of the plan earned during the marriage. The QDRO makes this a legal mandate so that your ex has to pay you once they start to receive their own payments. You still own a portion of that account, which was a marital asset.
One of the benefits of setting this up is that it can address a fund that your ex isn’t even receiving yet. Much of the property division process will revolve around splitting up assets that you already own, which is why people sometimes overlook retirement assets. But you don’t have to. Retirement funds can also be addressed at the same time, and then the order goes into effect when your spouse retires.
Do you need a QDRO?
If you’d like to set this up or learn more about your other options, you should take the time to consider them carefully. Do not leave valuable assets on the table during a divorce.