As you proceed in your divorce, you will get to the point where you need to start dividing your assets, which will include any retirement accounts. Retirement accounts are special in that they require considerations that other assets do not need to divide them. There are many laws governing these accounts, including penalties and taxes levied against them when you use them prior to the set retirement age.
To divide a retirement account, you will need a qualified domestic relation order, according to the U.S. Department of Labor. The QRDO comes from the court as an order for how to divide the account. The court will create the QRDO based on state laws concerning property division.
A QDRO spells out the details of the division. It will cover who receives money from the account and how much money he or she will receive.
A QDRO must include specific information to be valid. It must state your names and addresses, the specific monetary amount to pay out under the order, the details of when and how to make those payments and the name of the plan.
It is important to ensure the document contains all this required information and any additional information to clarify the order.
You will need a QDRO to divide a retirement account because of the way these plans work. Whoever is in charge of the plan cannot legally give you money from an account that does not belong to you. This includes transferring it to another account. A QDRO is needed to do anything of this nature. Without the QDRO, even if you and your spouse agree to the division, the plan owner does not have to make any distributions.
Commonly a QDRO is a way to divide a retirement account for the purpose of property division in a divorce. However, the court can also use it as a way to make child support payments.
Before deciding on how to divide retirement savings in a divorce, it is always a good idea to first discuss your goals and concerns with an experienced divorce attorney.