Individuals who are going through a divorce might have to deal with retirement accounts. These take special consideration because there are significant financial and tax implications if they are mishandled. For any qualified plans, such as 401(k)s, the only way to transfer the asset from one party to the other without having to face those is to have a qualified domestic relations order.
This court order outlines how to divide the account and identifies both parties. The court issues it and the plan administrator must accept it unless there are problems with it. When the plan administrator does note that something is amiss, a notice outlines the steps to take to correct the error. The QDRO is accepted once those errors are addressed.
You aren’t going to get the order automatically, however. Instead, you must ask for it during the property division process. Failing to get it could mean that you face early withdrawal penalties and tax consequences.
We understand that this is a situation many people aren’t familiar with. We can work on your behalf to ensure that you have the documentation you need to receive what you are due in the divorce.
These retirement accounts aren’t all you have to think about during property division. You also need to split other assets, including homes, and debts. Together, this divides the marital property and enables you to take control of the ones that are meant for you.
There are several considerations for you to think about during this process. We are here to help you find out your options so that you can make informed choices.