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Properly dividing retirement plans in a divorce

Georgia couples who get a divorce should know that the different types of retirement accounts that they will have to divide each come with their own rules regarding how they should be divided. If the wrong procedure is used, divorcees may be saddled with very high taxes and penalties. The account holders may also unintentionally give their ex-spouses a larger portion of the retirement funds than to which they may be entitled.

People who may be entitled to a portion of their future ex-spouses' workplace retirement plans should complete a qualified domestic relations order. A QDRO is a legal document that is separate from a divorce decree, and it is required in order for individuals to legally obtain their share of the retirement funds whether it is from a traditional pension plan or a 401(k) plan.

The information in the QDRO should reflect the contents of the divorce decree and specify how the retirement funds should be treated. It will have to state whether the funds should be transferred directly into a rollover IRA or if the receiving party should receive the funds outright.

Individuals should have their attorneys review the order before it is filed with the court to ensure that it is in line with the divorce agreement. When there are multiple retirement accounts that have to be divided, a separate QDRO will have to be submitted for each one. After the order is filed with the court and before any funds are transferred, the administrator of the pension plan will have to give its approval.

A divorce attorney may work on behalf of clients involved in high-asset divorces to obtain the property division terms they desire. A lawyer may conduct complex valuations of assets and verify the proper procedure for dividing certain assets, including the funds in retirement accounts.

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Hecht Family Law
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