When a couple divorces, their final divorce decree will split their assets according to the principles of equitable distribution. When an asset is not payable immediately, like retirement accounts, pension plans, and certain other financial instruments, distributing them when a marriage dissolves can get complicated. Federal law applies to many of these accounts, and there are tax implications that could result in significant liabilities.
If you and your spouse are divorcing and one or both of you have retirement funds, pensions, or other accounts that are not payable immediately, an Atlanta, GA Qualified Domestic Relations Orders (QDRO) lawyer can help you facilitate the process of distributing or receiving funds post-divorce. Let a property division attorney help draft a QDRO that tells plan administrators how and when to distribute pension assets to your former spouse.
Many pension funds and retirement accounts allow an individual to defer paying taxes on the funds. The money grows, and the depositor does not have to pay taxes on their gains until they take the money out later in life. These plans offer a considerable benefit to depositors, so there are usually significant tax penalties if they withdraw the money early.
In addition, the federal Employee Retirement Income Security Act does not allow plan managers to change the payee on a pension or retirement account without a court order. A QDRO is a court order that allows a couple to decide which spouse gets what percentage of the other’s retirement and pension funds and when. It also gives the receiving spouse their share of the asset without distributing the money immediately and triggering tax penalties.
In uncontested divorces, couples have the option to divide their assets themselves in an agreement which can then be submitted to the court for approval. However, valuing assets that are payable in the future is complicated and often requires the experience and skill of a Georgia attorney who is familiar with QDROs.
Regardless of whether a divorce is contested, a couple should consult an attorney to draft a QDRO when their assets include a:
It is also advisable to seek a QDRO when your assets include a military pension (Military Pension Division Order) or a federal pension (Court Order Acceptable for Processing). An attorney can help draft the QDRO or similar order, and the judge would sign it. The QDRO is then sent to the plan administrator to inform them of the couple’s agreement on how and when to distribute the assets in the account.
Issues surrounding the division of pension and/or retirement assets can get complex and messy and could spark anger or resentment in you or your soon-to-be-ex. Even so, it is critical to work through these issues to help ensure that your divorce settlement is fair and protects you for years to come.
Work with an Atlanta, GA QDRO lawyer to get sophisticated legal advice about effectively distributing your assets and securing your future. For best results, schedule a consultation as soon as you make the decision to divorce.