Deciphering marital assets through a QDRO

During the divorce process, assets get scrutiny as they should. Each spouse should walk away from the marriage with their rightful assets when dividing property. One area that definitely needs high attention is retirement investments.

Wading through the complexity of IRAs, 401(k)s, pensions, profit-sharing and employee stock ownership is necessary for determining marital and non-marital assets. It promises to be a time-consuming endeavor. However, an effective tool known as a qualified domestic relations order (QDRO) will help by assigning a spouse his or her share of those retirement assets.

Judge order or attorneys agree

It is important to know that assets within a retirement plan do not get divided equally, and a spouse cannot simply give the money to the other spouse. This is the job designated for the QDRO. For a QDRO to come into play, either a court must order it, or the attorneys representing divorcing clients in mediation scenarios must agree to pursue one.

Leave it up to a knowledgeable attorney to create a thorough QDRO that addresses every asset within the retirement accounts. Once complete, the QDRO determines the amount of money someone receives from their estranged spouse’s retirement accounts.

Additional amounts are possible

The QDRO delves into details and also addresses whether additional payments and interest payments are required.

Consider this scenario. Upon the QDRO’s completion, one spouse is set to receive $500,000 from the other spouse’s retirement accounts. However, the divorce does not become final until four months later. During those four months, the value of a retirement investment portfolio may go up due to market conditions. As a result, the receiving spouse will gain a bit more than the $500,000.

Seek an attorney’s guidance

In addressing the complexity of retirement assets in a divorce, many people turn to a QDRO to determine the amount of marital assets. Drafting a QDRO can be difficult due to its complexities. This is why you need the assistance of an attorney who has experience with QDROs.