Why You Need Your QDRO Done Sooner Rather Than Later
You’ve just left the courthouse after presenting your agreement and giving testimony to the magistrate in an uncontested divorce. Or maybe today was the third day of a merits trial, and the judge decided who got what.
Whether your divorce was amicable or adversarial, whether you’re happy or sad about the outcome, you’re probably relieved that it’s over.
It probably isn’t.
If you or your former spouse has an interest in a retirement plan – or several plans – it is likely that a division or transfer of retirement assets is part of your agreement or your Judgment of Divorce. As much as you might want to move on and put the divorce process behind you, you’re not done. You should tie up this loose end soon, if not immediately.
- Death of the participant: If the plan participant dies prior to the submission of a QDRO to the plan administrator, very few plans allow posthumous transfers.
- Losing contact: Many divorced couples stay in contact with one another. Sometimes the divorce was truly amicable, and a friendly bond remains after the divorce.
If you and your ex do drift apart, however, it will be difficult to get the information required to draft a QDRO. Addresses, Social Security numbers, birth dates, even the specific plan name – all these are needed to complete a retirement transfer. Although you may think you know these things, it’s surprising how often people forget the specifics.
- Changes in plan information: When people change jobs, they often roll their 401K into another retirement plan or IRA. Similarly, when companies merge, they often merge retirement plans or change fund custodians. When this happens, there is no investment history before the transfer.
This makes the determination of investment experience (ie, market gains or losses) impossible, and the alternate payee may receive less money than he or she was originally entitled to.
- The participant retires: If this happens before you submit your QDRO, and your former spouse begins to receive pension benefits, you likely won’t be reimbursed for benefits the plan has already disbursed to your spouse. Additionally, if you were entitled to a survivor benefit and the participant did not elect one at the time of divorce, that benefit is lost permanently.
So don’t wait to get your QDRO settled. Better yet, get started before your divorce is final. At the Law Office of Laura N. Venezia, our team can help you get your QDRO taken care of with as little stress as possible. Call today!