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Divorce involves dividing retirement plans

When love blossoms, St. Clair Shores, Michigan, couples race towards marriage. When love withers, those couples race towards divorce. In the latter case, the couples are less concerned with each other's welfare and more concerned with taking care of their own, expressing their concern in the form of pursuing marital assets. Those assets can include retirement plans, which often need to be approached in a special way, using something called a qualified domestic relations order (QDRO).

A QDRO, which is a special type of order, is a way to address the division of certain types of retirement plans, such as 403(b) and qualified plans like 401(k) s. The order transfers part of an employer-sponsored retirement plan's benefits to a person other than the employee they were originally intended for. The other person, referred to as an alternate payee, is typically the ex of the employee.

The ex may be awarded those benefits while the employee who earned them is alive, or after that employee has passed away, at which point the benefits are called survivor benefits. The QDRO will specify the name and mailing address of the employee, known as the plan's participant, the name and mailing address of the alternate payee, and the amounts to be accorded to each respectively.

QDROs may be drafted by divorce attorneys, but need to be officially issued by the divorce court. After that, the pension plan administrator will need to review it and approve it or not approve it. If they don't approve it, they need to explain why and details the steps that need to be taken so it will be approved.

Due to the complexities involved, QDROs and other efforts to secure division of an ex's retirement plans should be carefully reviewed with an attorney. The first step is establishing the kind of plans that exist and their value.

Source: Investopedia, "What’s a QDRO?," Jean Folger, Feb. 26, 2018

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