Divorces often include the complex negotiation of finances, particularly with longer marriages where assets have accumulated. The division of these assets can feel cumbersome but will also help ensure that both parties are able to move forward in good and equitable shape. One way in which these assets are divided is with a qualified domestic relations order (QDRO). Especially if there are multiple retirement accounts, you should understand what this is and how it can benefit you.
What is a QDRO?
A QDRO is a court order that details how retirement accounts and pension plans will be divided by the divorcing spouses. A QDRO designates an alternate payee to receive a specific portion of the retirement benefits earned by the employed spouse. It covers retirement accounts, such as 401(k) plans and pensions.
Importance in a Divorce
A Judgment and Decree will often direct one or both parties to obtain a QDRO to implement the division of assets agreed upon by the parties or ordered by the court. There are significant benefits that come from using a QDRO in a divorce settlement.
Division of Assets
Retirement accounts can be one of the largest assets in a marriage. Establishing a QDRO can ensure that such assets are divided as intended by the Judgment and Decree. Even as a non-working spouse, you are entitled to an equitable share of those marital assets. A QDRO will also address other issues, such as changes in the value of an asset or what will happen in the event a party passes away. This will make sure you get the benefit of those retirement assets after your divorce.
Long-Term Security
A QDRO eliminates any ambiguity with the division of retirement assets. You can have the peace of mind that comes with knowing that you receive the income you deserve during your advancing years.
Tax Benefits
Withdrawing from a retirement account before retirement age leads to early-withdrawal tax penalties from the IRS. If properly done, a QDRO will minimize tax liabilities that may otherwise result from dividing an asset.
Contact Us
A QDRO is a very effective way to help ensure a fair and equitable division of assets. It helps establish the future security of both spouses and avoids potential pitfalls. To do this, it needs to be done properly. Creating a QDRO is not a simple process, and it takes an experienced Minnesota QDRO lawyer to ensure it is done correctly. Call us at (612) 294-2200 to speak with a divorce attorney with the experience to create a QDRO that will help ensure your future security.