If you are getting a divorce and the divisible marital assets include a pension or retirement fund, you may need a Qualified Domestic Relations Order (QDRO). These orders instruct fund administrators to pay a portion of a fund to a former spouse at a specified time.
It is easy to overlook the value of a retirement fund because the money is not available until the account holder reaches a certain age, but spouses who do not carefully consider the value of these funds might lose out in a divorce settlement.
If your marriage is ending and either of you have retirement benefits or pensions, consult an Alpharetta Qualified Domestic Relations Order lawyer right away. They can help ensure the funds are divided fairly and that the order distributing them meets all legal requirements.
When couples divorce, they must divide their marital property equitably. Equitable distribution does not have to be a 50/50 split but instead must be fair to both parties. While state law does not explicitly address this issue, past court decisions clarify that retirement funds accumulated during a marriage are considered marital property upon divorce.
You can claim the portion of the retirement savings that you contributed before marriage as separate property, but all contributions, interest, and dividends earned during the marriage belong to both spouses under Georgia laws. An Alpharetta QDRO attorney can help ensure that you receive a fair share of the retirement funds that accounts for your contributions to the marriage, your ability to provide for yourself in the future, and other relevant factors.
Retirement savings plans, pensions, and other types of savings plans that are not immediately accessible often come with tax savings. However, penalties and taxes apply if the account holder accesses the money early.
When a couple is divorcing, it might be tempting to withdraw a portion of a spouse’s retirement funds and give it to the other spouse. However, doing so might lead to losing a significant portion of the money to taxes and penalties. Working with an Alpharetta attorney to draft a QDRO avoids the need to withdraw money.
A QDRO instructs a fund administrator to make payments to an alternate payee (i.e., the ex-spouse). The QDRO will specify the percentage of the funds the ex-spouse should receive and when. Sometimes, the receiving spouse may set up their own retirement account to receive the funds as a rollover without triggering tax penalties. In other cases, the funds will not be available until the account holder is eligible to receive them without penalty.
A couple might have several retirement or pension plans that require a QDRO to distribute. While it is not necessary to draft a separate QDRO for each account and plan that is subject to equitable division, the Qualified Domestic Relations Order must clearly state:
A QDRO is typically issued after a divorce has become final and may not be used to influence the equitable distribution of assets before a marriage is dissolved.
Retirement funds often make up a large portion of a couple’s divisible assets. Do not overlook these funds when negotiating a divorce settlement. Let an Alpharetta QDRO lawyer help ensure that you receive an appropriate percentage of the retirement funds you and your spouse accumulated during your marriage. Call today to schedule a consultation.