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Divorce: How Do I Get My Share of the Retirement Assets?

Divorce: How Do I Get My Share of the Retirement Assets?

February 14, 2024

The most important thing you need to know, when rewarded retirement assets during divorce, is that just because the divorce judgment says you will receive retirement assets, the words alone do not accomplish the division.

Divorce involves dividing marital property, and the more assets a couple has, the more complicated it can be. Joint bank accounts can be easily divided, however, when it comes to the division of retirement accounts, things can get complicated.  If you or your spouse have an employer-provided retirement plan or an IRA, it may need to be divided by a QDRO or Qualified Domestic Relations Order.

Credit: Modern Family Law

What is a Qualified Domestic Relations Order?

Federal law requires retirement plans in a divorce to be allocated using a Qualified Domestic Relations Order, or QDRO.

The QDRO is a legal document the judge signs after divorce.  It authorizes the retirement plan administrator (the company/custodian that holds the IRA or 401k account) to distribute part of the account from one spouse to another.

Unlike a bank account, we can’t just pull the funds out of a retirement account and split them down the middle. The divorce decree will indicate what portion of the funds in the account are marital property and separate property.

At Impel Wealth Management, I see many clients needing help with their QDRO from a divorce. It can be complicated, and I can help navigate the process and keep things moving forward.

Credit: USA Today

For 401(k)s or other Retirement Accounts

Some retirement plans, like 401(k)s, can be divided by the plan administrator. The owner of the 401(k) keeps their share, while the new owner’s share can be rolled into an individual retirement account (IRA) or other retirement account.

When people come to me, pre- or post-divorce, I help them understand the type of account they are dealing with and how funds can be distributed.  This helps them understand their options and reduces their stress by showing them clear paths to resolution.

Source: Investopedia

How do I get my money?

The following is the typical flow of actions that I share with clients who are preparing for or executing a divorce:

  1. Gather information. You need to gather data, including full names, their current and old addresses, Social Security number, date of birth, dates of marriage and divorce, etc. This includes copies of the divorce decree or separation agreement.  Yes, some clients come to us and do not know their spouse/ex-spouse’s date of birth or wedding date.

     2. Next, the QDRO must be drafted. One of the attorneys will draft the QDRO.  All types of retirement account divisions are generally referred to as QDROs.

     3. Gain approval from the other party. The draft of the QDRO is sent to the other spouse’s attorney for review and approval. They will diligently accept the QDRO, if it accurately reflects the divorce decree. 

     4. Request approval by IRA or 401(k) Plan Administrator. The draft of the QDRO is then sent to the 401(k) plan, IRA Custodian, or Pension Plan Administrator for approval. It is not unusual for the Plan Administrator to request changes in QDROs; in fact, this happens to my clients often. 

     5. Obtain the judge’s signature. Once the QDRO has been approved in draft form, both parties sign it, and it is presented to the judge for signature.

Credit: The Boston Globe

  6. Collect certified copies of the QDRO. Once the judge signs the QDRO, the person seeking the money should obtain enough certified copies of the QDRO (one for every retirement account) from the clerk of courts. It is then sent to the Plan Administrator/custodian for final approval, acceptance, and payment.

  7. Receive final acceptance by the plan. Final approval happens very quickly, especially if the 401(k)/IRA company has already reviewed the QDRO as a draft.

The QDRO process can be long, depending on cooperation from your ex-spouse and their attorney.  It is wise to start this process quickly after your divorce is finalized.  Because a QDRO is complicated, turn to the trusted resources at Impel Wealth Management. We are here to guide you and help propel your QDRO forward.  We have worked on many QDROs throughout our careers and know when and how to push professionals on this process.

If you or a loved one or friend is going through a divorce, I am available to help explore options and minimize the stress at a very difficult time in life.  Frequently I receive questions on this topic, and I wanted to make sure to cover it for you, as we all continue Moving Life Forward.


© 2024 Irene Zurowski

The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

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