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Blog 2019 November Do I Need to Have a QDRO When I Get Divorced?
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Do I Need to Have a QDRO When I Get Divorced?

Posted By Law Office of Kathryn Marteeny || 20-Nov-2019

If you are getting a divorce, you might be looking into the process, trying to get a better idea of the steps involved. During your quest for answers, you likely came across the term Qualified Domestic Relations Order (QDRO). A QDRO is essentially a legal order that is used to divide certain retirement benefits, such as 401(k) plans, IRAs, and private pension plans while protecting the participating spouse from incurring an early withdrawal penalty. If you wish to use a QDRO, however, your retirement plan must be covered by the Employee Retirement Income Security Act (ERISA).

How a QDRO Can Help You

Only the marital portion of your retirement benefits are subject to division in a divorce. Therefore, any of the contributions you made to your retirement plans before your marriage will not end up on the chopping block. However, this is not always straightforward, and pensions can be particularly challenging to calculate, especially if the participating spouse did not retire yet.

If you and your spouse would rather forego this complex process, you should consider trading an asset comparable in value during settlement negotiations. Doing so will remove the need for a QDRO and keep your plan on track. If you and your spouse have similar retirement assets and contributions, a judge might even decide that you should both keep your respective plans instead of going through the trouble of dividing them.

Ultimately, if you are determined to avoid using a QDRO, you have other options available to you and, depending on your circumstances, they might be better suited for your needs.

Managing Your QDRO Assets

If you do end up obtaining a QDRO to divide retirement assets during the divorce process, you have a few different options available for managing them. You can take the money as a lump sum, but you must be prepared to pay taxes on it. For many, taking a lump sum and paying an exorbitant amount of taxes on it is not an ideal option. If you wish to wait, you can place the money in a qualified retirement plan where it will continue to grow until you choose to retire. Another option that will allow you defer taxes on these assets is to roll the money over into an IRA. Under these circumstances, your QDRO assets will remain totally under your control.

Schedule a Consultation with One of Our Divorce Attorneys Today!

Getting a divorce is a complex process, especially when it comes to dividing retirement assets. At the Law Office of Kathryn Marteeny, our knowledgeable divorce attorneys will help guide you throughout this process, so your interests remain protected. With over three decades of collective experience, you can trust our ability to help you navigate your case, no matter how complex it might be. Even if retirement is nowhere near your horizon, it is never a good idea to gamble with your future.

Get started on your case today and contact our legal team at (713) 936-2300 to schedule a consultation with one of our divorce attorneys.

Categories: Divorce, Family Law, Property Division

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Law Office of Kathryn Marteeny
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