It may not be the first thing on your mind during a divorce, but your retirement accounts are a very important part of your assets regarding the divorce process. For most people, their retirement accounts like 401ks, IRAs and pension plans are one of their most valuable assets. Dividing these accounts can be extremely complicated and difficult to process, especially if mishandled.
What Should You Know About Your Retirement Accounts?
Understanding marital property is one of the most important parts of this process. Retirement funds added during your marriage are usually considered marital property. That means that any contributions made to your accounts are divided during divorce. However, that also means that any contributions made prior to marriage are separate, and not included when dividing assets.
Because this process can be so complicated, it’s important that your divorce settlement clearly details how these assets will be split and how the funds will be transferred to each party. Additionally, most of these settlements will require a Qualified Domestic Relations Order.
What Is A QDRO?
A Qualified Domestic Relations Order, or QDRO, is a court order that outlines the instructions for the division of a 401k or pension plan. This order allows the funds in these accounts to be distributed into a non-employee’s account. This is a crucial part of this process, but it can be confusing as it’s handled after the actual divorce process.
Getting help in these situations is important, so you will want to consult with your divorce attorney to get a better understanding of your situation and more information about how these assets are divided during divorce.