When dividing up assets in a divorce, people usually think of the house, the car(s) and bank account(s). What doesn't likely come to mind are 401(k)s, pension plans and other retirement accounts. However, the value added to a retirement account during the marriage is part of the marital estate. Retirement accounts should not be overlooked as their net worth may well exceed the value of a couple's home or any other of their assets.
Alternatively, a court can issue a Qualified Domestic Relations Order (QDRO) that directs a pension administrator to send checks to both spouses. The amount is based on a predetermined percentage. A QDRO provides a non-employee spouse the protection a divorce settlement agreement does not. While an agreement may or may not be specific and may require additional litigation to enforce, a QDRO is a court order sent directly to a pension administrator who simply cuts a second check for a specified amount.
Because a plan administrator must also approve a QDRO, administrators can usually provide standardized QDRO forms. However, standardized forms may not cover all unique circumstances and it is better to not leave things up to chance. To protect your share in a separation, consult a divorce attorney specializing in QDROs to discuss your situation and your options.
