Dealing with Retirement Plans and QDROs in Divorce

Along with the marital home, retirement funds are usually the largest asset involved with the divorce settlement. Many people wonder if they will lose their retirement savings and if they can use the money in their retirement funds for needed cash.Retirement and divorce

There are two primary types of retirement funds: Defined Contribution Plans Defined Benefit Plans.

Defined Contribution Plans, most notably IRAs and 401(k)s, are like savings accounts.  You put money into them, your contributions may be matched by your employer, and at retirement, you can tap into these funds.  You can look at a statement and see how much they are worthwith the caveat that you need to be aware if they are pre-tax or post-tax.

Defined Benefit Plans, often referred to as pensions or annuities, are ones in which the employer promises to pay the employee a particular benefit when the employee reaches retirement age.  The employer (and sometimes the employee) makes contributions to the Plan, and the benefit received at retirement is often based on the number of years employed and final salary.  Sometimes Defined Benefit Plan statements will show a “cash value” of the plan. This is rarely the real value of the Plan.

Obtaining information about all the retirement plans early in the divorce process is important, since decisions cannot be made until we have that information.  This is particularly important for Defined Benefit Plans, since it often takes weeks to get the needed information from the Plan Administrators.

We have particular expertise in retirement plans and how they can be treated as part of a divorce settlement. We also write the Court Orders that are needed to divorce or transfer funds from retirement plans as part of the divorce.

For more information on retirement plans, please see the Divorce and Retirement page on this web site and our separate QDRO web site

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