Hendrickson Cooper Hughes Menu Contact
Focused On Divorce, Custody And Family Matters
714-362-2413

How Do Retirement Assets Get Split Up in a Divorce?

There are many technical terms you might run across during the divorce process, but there are four specific words that often confuse and sometimes mystify people: Qualified Domestic Relations Order (also known as QDRO). In simple terms, a Qualified Domestic Relations details how a couple's retirement assets will be split in the wake of a divorce. The QDRO is so important, that for some ex-spouses, it can determine whether their financial future is secure or perilous.

Many times a couple's retirement accounts are the largest asset of the divorce, and oftentimes the retirement accounts are the couple's ONLY big financial asset. That being said, it is critical that the QDRO is painstakingly detailed. If it's not, and is vague or mishandled, the results can be devastating. Take this as an example: a wife and husband were in mediation in the summer of 2008, and they had a 401(k) with $100,000 in it. And what they meant to do was divide that account in half-where each spouse receives 50%-and adjust the account for earnings and losses from the day the two made this deal until the day it actually gets done. But let's say what was written in the agreement says, "The wife gets $50,000," which at the time was half of the assets. Several months later, after the market collapsed, that would take on a whole new meaning and open up a whole new argument. The wife would say: "It says right here: I get $50,000." And the husband would say: "Well, I didn't say you get 100% of the account; that's the whole value of the account now."

We often get asked when the details of a QDRO should be negotiated. Legally, there is no mandate as to when that should happen, but the sooner the better, and normally a QDRO is filled out or filed right after the divorce is complete. QDROs can be shockingly complicated; it's an order that has to be entered by the court and approved by the retirement plans involved. That's why if you are involved in a divorce that has retirement plans which will need to be split up, it's important that you work with an attorney that is knowledgeable and experienced in working with QDROs.

One last tip we have for you is to familiarize and educate yourself on the basics of your retirement plan. Know the difference between a qualified and nonqualified plan, and what you have. This is important information to have, because qualified plans, such as a 401(k)s and traditional pensions, fall under federal regulations and can be divided between spouses by means of a QDRO. Nonqualified plans aren't subject to the same federal regulations, and aren't subject to QDRO rules.

If you have any questions regarding QDROs, please don't hesitate to give us a call. We're here to help!

Disclaimer – The materials contained in this blog have been prepared for informational purposes only. The information contained is general in nature, and may not apply to particular factual or legal circumstances. In any event, the materials do not constitute legal advice or opinions and should not be relied up on as such.

(Source: Splitting Up Nest Eggs, wjs.com)

No Comments

Leave a comment
Comment Information

Contact One Of Our Professionals Today

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

On The Business Leader Spotlight Show

Listen to Attorney Patricia now

Hendrickson Cooper Hughes
18377 Beach Boulevard, Suite 100
Huntington Beach, CA 92648

Phone: 714-362-2413
Fax: 714-969-4410
Huntington Beach Law Office Map

Email Us Today