In a divorce, there is a legal decree known as a qualified domestic relations order (QDRO) that requires a portion of an individual’s retirement plan to be paid to their former spouse. Essentially, this judgment divides a spouse’s retirement plans in the event of a divorce. However, a QDRO could assign a portion of retirement funds to go to a child. If the dissolution of your marriage is imminent, contact one of our trusted and experienced Union County Divorce & Family Law Attorneys who can help you request a QDRO.
What does a QDRO do in a divorce?
In New Jersey, retirement funds are considered marital property. This means they are up for division in the event of a divorce. When a spouse wants a portion of their ex’s retirement funds to be divided in a divorce, they must request a QDRO. This is a legal document that requires a specific amount of a spouse’s retirement benefits to be assigned to their former spouse. However, the funds could be assigned to pay for alimony, marital property rights, and child support. If an individual is granted a QDRO it must comply with the domestic relations laws in New Jersey. This means it must comply with the Employee Retirement Income Security Act (ERISA) which protects beneficiaries. A judge must sign a QDRO for retirement assets to be distributed and transferred. However, before a judge signs a QDRO they will asses the financial situation of both parties to determine if the request is reasonable. If accepted spouses may be assigned up to 50% of their spouse’s retirement benefits. Spouses who are granted QDROs are referred to as alternate payees. The money assigned in a QDRO does not have tax penalties.
What types of retirement plans are up for division?
In a QDRO there are only certain kinds of retirement plans that can be divided which include:
- 401 (k) retirmenet plans
- 403 (b) retirmenet plans
- 457 retirement plans
- Tax-sheltered annuities
- Profit sharing and money purchase pans
- Employee stock ownership plans
- Any other qualified retirement plans
All of the above can be divided into a QDRO in the event of a divorce. However, certain retirement plans cannot be divided with a QDRO. Retirement plans that are not up for division include:
- Military pensions
- government pensions
- Differed annuities
- Differed contribution
- Any other retirement plan that is not qualified
Depending on the type of retirement account individuals have, they may or may not be able to be divided in a divorce through a QDRO request. Individuals who wish to receive a portion of their spouse’s retirement benefits should request a QDRO to help them financially after a divorce. In certain cases, individuals are dependents and rely on their spouse’s income. A QDRO would be extremely beneficial in this scenario. Regardless of whether or not your spouse is the breadwinner, individuals may request a QDRO in their divorce.
If you are seeking a divorce and wish to request a QDRO, reach out to one of our adept and knowledgeable team members. With our years of experience, we can help you achieve favorable results.