When it comes to splitting assets during divorce, it can be particularly difficult to resolve issues involving retirement saving accounts and pensions. To provide divorcing spouses with a fair distribution of assets, the courts have the power to issue something known as a “Qualified Domestic Relations Order” or QDRO.
A QDRO is used to distribute the proceeds of a retirement plan when liquidating it does not make sense from a tax perspective. Obtaining an order that is fair and which stands up to legal scrutiny could be difficult without the help of a dedicated property division attorney. Before you make plans on your own, discuss your concerns with a Cherokee County Qualified Domestic Relations Order lawyer.
Enlisting the help of a Cherokee County attorney to secure a QDRO can be necessary in some cases. The federal Employee Retirement Income Security Act (ERISA) — places strict limitations on how one party assigns interest in a retirement account to another. Specifically, the law generally prevents the transfer or assignment of retirement accounts altogether.
However, federal law will not prevent transfers or assignments necessitated by a valid court order. For that reason, a QDRO is often the only option for transferring interest in these accounts and distributing funds post-divorce. In other situations where ERISA does not require an order, the employer that oversees the retirement or pension account might require one.
For many people, a QDRO is necessary for managing a single retirement plan post-divorce. An appropriately drafted order could help protect multiple retirement or pension plans. When a QDRO has been properly drafted, it could provide for each of the retirement or pension plans held by a spouse. This is true even when there are multiple accounts created by different employers.
There are times when a QDRO is not necessary. Certain types of accounts can be transferred freely during or after a divorce without additional court intervention or substantial tax consequences. A lawyer serving Cherokee County can provide clear guidance on when a QDRO is necessary and help you get one drafted and approved.
Many divorcing couples wonder why simply liquidating a retirement account and paying one another their share of the proceeds is a bad idea. The problem with this approach is that there are often serious consequences for liquidating a retirement account before you’re supposed to.
There are often significant early withdrawal penalties that could eat up a large portion of the account. In some cases, these penalties could add up to thousands of dollars. By working with a QDRO attorney in Cherokee County, it is possible to divide a retirement account without facing such penalties.
The failure to adequately address retirement or pension plans after divorce could have a costly impact on everyone involved. The specific wording of each QDRO must be precise for these transfers to be recognized under the law. Every order must include an assignment of specific rights for each account it intends to cover.
If you have questions about your rights and responsibilities post-divorce, a Cherokee County Qualified Domestic Relations Order (QDRO) lawyer can help. Call right away to learn more about distributing your retirement plan or pension funds through a QDRO to avoid hefty tax consequences.
Atlanta Divorce Law Group