Posts Tagged Retirement

Dividing Qualified Retirement Plans in the Aftermath of Divorce

Splitting assets during a divorce can be an arduous task. To complicate things, the division of certain retirement savings accounts requires an extra step.

DRO vs. QDRO Divorce proceedings often conclude with a domestic relations order (DRO) to lay out the division of retirement assets. However, assets from a qualified retirement plan, such as a 401(k), are covered by the Employee Retirement Income Security Act of 1974 (ERISA). These types of retirement plans have stricter rules when it comes to benefit distribution and therefore require an approved DRO is known as a Qualified Domestic Relations Order (QDRO).

Federal law stipulates that a QDRO is required for qualified plans like defined benefit plans, ESOPs, 401(k) plans, and profit-sharing plans. According to ERISA and Internal Revenue Code, most qualified retirement plans won’t pay any benefits to an ex-spouse without a QDRO because plan participants can’t legally assign their stake in the plan … Read More »