So many things swirl through your head while going through a divorce, especially after a lengthy marriage in which you and your spouse accumulated a significant amount of assets. There are many issues and matters to address as part of a divorce checklist. And one of them is a qualified domestic relations order (QDRO).
Issued by the court, a QDRO addresses some of the specific property division aspects in divorce. It provides you with the opportunity to secure your share of money from retirement plans, including 401(k)s, 403(b)s, profit-sharing and pension plans. This is an issue that often surfaces in gray divorce.
Calculating the amount you deserve
The details within QDROs define the exact amount of money you shall receive, ensuring a division of assets that goes as smoothly as possible. As a result of a QDRO, you become a plan beneficiary.
To initiate a QDRO, you must contact the administrator of the retirement plan to obtain the necessary documents. However, a skilled attorney can create a QDRO for you, too. Working with an experienced attorney is a solid investment by knowing that a QDRO is done correctly.
A well-prepared QDRO provides thorough details on payment determination as well as any interest you may receive from that amount. For example, let us say that through the QDRO calculations, you will receive $500,000. However, if your divorce is not finalized for another six months, you will receive interest earned on that $500,000.
Another facet of a solid QDRO includes determining how much money you will receive if your former spouse dies.
It is your decision as to what to do with that money from the retirement plans. For example, you could take it in one lump sum, but that promises certain tax consequences, or you can shift it into a rollover IRA.
Remember, you were part of a union that lasted a long time. Together you were a team with different strengths. And, during your marriage, you built up quite an investment portfolio. You deserve your fair share, and you will obtain it via a QDRO.