You're smart to click on this resource. Because the right time to think about securing your share of retirement funds in a divorce is at the beginning of the divorce process. Retirement savings can be an important bargaining tool as you divide your assets, and retirement savings can be used to pay spousal and child support payments ... but only if the appropriate paperwork is filed with the court.
There are two ways to divide a retirement plan.
If you don't file the right paperwork in the right way, you will not get your money. There are two ways of dividing a retirement plan:
- A Qualified Domestic Relations Order (QDRO) is a court order used to divide a private retirement plan.
- A Domestic Relations Order (DRO) is required to divide a public retirement plan. (State, federal and military employees, this is you.)
Every retirement plan is governed by different rules depending on the plan type, i.e. 401(k), 403(b), etc. Generally, a separate QDRO is required for each plan. So, let's say you worked for the State for a decade and have retirement funds in a public plan. Then you went to the private sector and saved funds in a 401(k). Then, you spent some time at a nonprofit accruing retirement funds in your 403(b). And then you got divorced, and you and your spouse decided to divide all of your retirement accounts equally. You'd need to file a DRO for the funds in your public plan and two separate QDROs for your 401(k) and your 403(b).
It's important to understand the two kinds of retirement plans.
Defined Benefit Plan
The first type of retirement plan is a Defined Benefit Plan. This type of plan is either (1) a traditional pension or retirement plan that will pay monthly over time once you start taking your benefits, or, (2) a cash balance plan that provides a lump-sum payment with the option to take monthly payments over time.
Many mid-size to large-size private companies have defined benefit plans for their employees (e.g., AT&T, Boeing, Disney). To help you recognize a defined benefit plan, typically the plan name includes the words "defined benefit plan," "retirement plan," "pension plan," or "cash balance plan." (401(k)s and 403(b)s are not defined benefit plans.)
In the public sector, examples of state public-defined benefit plans are the Public Employees Retirement System or the State Teachers' Retirement System. Examples of federal public-defined benefit plans are the Civil Service Retirement System, Federal Employees Retirement System, and Armed Forces Retirement System.
Defined Contribution Plan
Offered by both public and private retirement plans, a Defined Contribution Plan deposits pretax money directly into an account for each employee. Contributions may be made by the employee, the employer, or a combination of both. The retirement plan could be any of the following: a 401(k) plan, profit-sharing plan, savings plan, money purchase pension plans, employee stock ownership plans, 401(a) plans, 457(b) plans, 403(b) plans, tax-sheltered annuities, thrift plans, or deferred compensation plans.
To help you identify whether your plan is a defined contribution plan, the actual name of the plan likely includes language referencing the type of plan; e.g., "ABC 401k Plan."
In a nutshell: it is very important to understand what plans to divide because (1) they are divided very differently in the QDRO, and (2) you don't want to miss a plan!
Something important to remember:
Mid-size to large-size private and public employers likely have both a defined benefit plan and a defined contribution plan for their employees. Very often, parties in a divorce unknowingly only divide one of the two plans in a divorce.
For example, let's say the divorce judgment awards marital or community property interest in one party's 401(k). And let's say that party also has a traditional pension (defined benefit plan) that will be paid monthly, at a later time. If they only file a QDRO to separate the 401(k), the other spouse is missing out on their future share of the pension – a million-dollar asset that is often missed! Working with a QDRO expert is critical to you getting your share of retirement funds. Incorrectly filed paperwork could mean you (legally) miss out on money you and your ex have agreed you're owed.
What are the steps involved in filing a QDRO or DRO?
Step 1
Gather basic information about your retirement plans. Can you create a list of your current retirement accounts? Can you develop a list of employers where you and your spouse worked during your marriage? Can you pull the contact information for each retirement account? How have you and your spouse decided to separate your retirement benefits?
If you don't know or aren't sure you have the complete picture, QDROCounsel has developed a database of employers and retirement plans. If you're not sure you are listing all the retirement plans that exist in your name, or if you can't remember the names of your retirement plans, they can help. Click here to learn more about our partnership and get a free flat-rate quote for using their expert QDRO service.
Step 2
Drafting the QDRO Your QDRO(s) will be drafted based on your case and your retirement account(s). If it is possible for you to have your retirement plan pre-approve a QDRO, QDROCounsel can help you obtain pre-approval. Whether you've chosen flat-rate, affordable support or have chosen to work with a lawyer experienced in filing QDROs, it is always a good idea to get QDRO pre-approval so there are no issues once your QDRO has been filed with the court and signed by the judgment.
Too often, we see QDROs drafted to harm one or both parties. so it is important to have your QDRO prepared based on your specific case facts and plan rules and the law.
Step 3
Review your QDRO and ask any final questions. QDROCounsel or another experienced QDRO expert will be able to provide explanations where you need them and other helpful tips or answers to your questions about the next steps.
Step 4
File the paperwork. Your QDRO preparer will file your QDRO with the court and they will send it to your retirement plan. And that's it. You're done!
How to Get Your Share of Retirement Savings in Divorce
Dividing retirement savings in a divorce can feel overwhelming. These accounts often represent years of work and are surrounded by complicated rules. The good news is that there’s a clear process to follow that protects your rights and avoids unnecessary taxes or penalties.
FAQs About Dividing Retirement Savings
Can I get part of my spouse’s retirement savings in a divorce?
Yes. If the retirement funds were earned during the marriage, they are usually considered marital property and can be divided in divorce.
How do I actually receive my share of retirement savings?
You typically need a court order called a Qualified Domestic Relations Order (QDRO) or a similar legal document. This tells the retirement plan administrator how to divide the funds.
What if my spouse had a retirement account before we married?
Any contributions made before marriage usually stay with your spouse, but contributions and growth during the marriage may be divided.
Can retirement assets be divided without cashing them out?
Yes. A QDRO can transfer your share into your own retirement account to avoid taxes and penalties, rather than withdrawing funds in cash.
Do I need a lawyer to divide retirement accounts?
It’s not always required, but many people benefit from professional help. Retirement accounts have strict rules, and errors can cause tax problems or delays.
What happens if we agree to keep our own retirement accounts?
If both spouses agree, you can waive rights to each other’s accounts, but this should be written clearly in your divorce agreement to make it legally binding.
Step-by-Step Guide: How to Get Your Share
Gather retirement account details
Collect statements and balances for all retirement accounts from both spouses, including 401(k), IRA, and pension plans.
Confirm marital vs separate property
Identify which portion of the retirement savings was earned during the marriage, since that is typically what can be divided.
Include retirement division in your divorce agreement
Make sure your divorce judgment or settlement specifies exactly how retirement accounts will be divided.
Request a Qualified Domestic Relations Order (QDRO)
Work with a lawyer or specialist to prepare a QDRO or similar order. This tells the plan administrator how to split the funds.
Submit the QDRO for court approval
File the QDRO with the court for approval and ensure it is signed by the judge.
Send the order to the retirement plan administrator
Provide the approved QDRO to the retirement plan administrator so the transfer can be processed.
Receive your share
Your portion may be rolled into your own retirement account or distributed directly, depending on your agreement and plan rules.
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