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Qualified Domestic Relations Orders (QDROs) in Divorce – What You Should Know

Posted on in Property Division

DuPage County divorce lawyersEven in the simplest of cases, divorce can be a complex matter. If you add in assets that are difficult to divide, such as a retirement account or pension plan, the process can become even more difficult to effectively navigate. Thankfully, divorcing parties can improve the outcome of their case by ensuring they have the assistance of a seasoned divorce team on their side. Learn more about retirement plans in divorce, including the importance, challenges, and risks completing a qualified domestic relations order (QDRO) with help from the following information.

What is a QDRO?

Most often seen in divorce proceedings, qualified domestic relations orders are used to instruct the plan administrator on how the benefits of a retirement plan will be paid to a non-employee (the spouse of an employee). Required only in ERISA-qualified plans, these documents are complicated and subject to approval from the administrator. There are also federal regulations that must be adhered to and tax consequences that one must consider when completing their QDRO. As such, individuals are discouraged from pursuing a QDRO without the assistance of an experienced legal professional.

QDRO Challenges and Considerations

As with any other asset, parties must carefully consider whether their portion of the retirement plan is worth what they are giving up. For example, an individual who needs more in liquid assets to cover their legal fees may want to trade out more cash for some of the retirement benefits. Alternatively, a party that has enough of an income to support themselves now but very little money for retirement may wish to give up some of the other assets in the divorce to obtain more out of the retirement account.

In either case, an agreement between the parties can be made. If the parties are unable to reach an agreement, the matter can go to litigation, where a judge will make the final determination on how the retirement account will be divided (provided the QDRO meets the plan’s rules and requirements). Tax implications, each party’s current and future financial situation, and any involved children are all factors that should be considered when developing a QDRO.

Contact Our DuPage County Divorce Lawyers

If you are planning on filing for divorce, and an ERISA-qualified plan is one of the assets to be divided, contact Davi Law Group, LLC for assistance. Our seasoned DuPage County divorce lawyers can examine your situation, advise you of your options, and aggressively represent you in your case. No matter what the circumstances, we always pursue the most favorable outcome. Call 630-580-6373 and schedule your free initial consultation to learn more.

Source:       

https://www.forbes.com/sites/jefflanders/2012/06/13/how-divorcing-women-should-handle-retirement-accounts-and-pension-plans/

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