When you go through a divorce in Arizona, you will need to divide the marital assets between you and your spouse. This will also include things like IRAs, 401(k)s, pensions, and other types of retirement plans if contributions were made to them during the marriage, as is often the case. This is where a QDRO will help.
Each couple is different. In some cases, both of the spouses will have retirement plans from when they worked, for example. Other times, only one of the spouses might have a retirement plan in place because the other spouse stayed home or was going to college. One of the things to know about divorce is that it doesn’t matter who has the retirement plan in their name. It’s part of the marital property and will need to be divided.
However, something that will matter when it comes to splitting this asset is how much of the retirement plan was funded during the marriage. This needs to be determined, so a fair amount is given to the spouse who is not on the retirement plan. For example, if you worked for 20 years and put money into your retirement plan, but you were only married for the last two years, it wouldn’t be fair to give your spouse half of 20 years’ worth of your retirement funds.
What Is a QDRO?
This stands for Qualified Domestic Relations Order. It is a technical order that will provide instructions on how the retirement plan administrator will have to divide the retirement benefits. This typically means that some of the benefits will be going to an alternate payee, not just the person who is on the retirement plan.
The QDRO is often used when couples are going through a divorce to divide the retirement benefits. However, it can also be used for other purposes. For example, a QDRO could be ordered against a pension plan to provide child support or spousal maintenance, if required. This does not happen often, but it is possible.
Is a QDRO Always Needed?
If you are going to receive money from your spouse’s retirement benefits, such as their pension, then you will need to have a QRDO completed. Otherwise, you wouldn’t be able to get those benefits. This is true even if you are awarded the money in your divorce decree. Perhaps you were given 30% of your ex’s pension in the decree, and it’s signed by the judge. You might think that’s all you need. However, it isn’t.
The retirement plan administrator can’t simply use that decree to ensure you get your share of that pension or other retirement benefit. You need to have the QDRO for it to be legal and to receive your money. This is because the retirement benefits are covered by not just the laws in the state of Arizona, but also ERISA and the Internal Revenue Code. If you don’t have the QDRO in place, you will not get the money from the retirement benefits you deserve.
Get a QDRO as Soon as Possible
One of the mistakes that a lot of people make is not filing their QDRO as soon as possible. The best option is to give the QDRO to the judge at the same time the consent decree is submitted when you and your ex decide to settle. If you weren’t able to settle, then it should be submitted when you go to the divorce trial.
However, a lot of people simply don’t. It could be that they forget, or if they are not using an attorney, they might not even have realized they need one. This can be a huge problem, as it could make it difficult to get the assets you are supposed to receive.
For example, if you don’t file the QDRO right away, there is a chance that your ex could take the money from their 401(k), which will make it nearly impossible for you to get that money back. You would have to try to take your spouse to court, again, for the money, and this just drags the process on further.
On the other hand, if you are the one whose retirement assets are going to be given to your ex, there’s a chance they can grow the longer you hold them. This means that your ex could end up getting more than what they would have got if you had just taken care of the QDRO in the first place.
Do not make the mistake of delaying the QDRO regardless of which side of the fence you happen to be on. There are too many potentially negative consequences that could come back to haunt you if you wait. Even if you are just now starting the divorce process, it’s a good idea to contact a QDRO attorney for some help.
Work with an Attorney
When retirement accounts are in play, you need an attorney that knows and understands how to prepare a QDRO for the judge. They can draft the paperwork, so the judge can sign it before the divorce has fully concluded, so there is no danger of one spouse not getting what they deserve from the retirement accounts.
If the divorce is already over, it doesn’t mean it’s too late. You are still technically awarded that money and those benefits. You just can’t get access to it until you have the QDRO in place. Regardless, you want to get in touch with an attorney who can walk you through the process and provide you with guidance each step of the way.
In some cases, your divorce attorney can create the QDRO for you. However, many divorce attorneys don’t have enough experience with the QDROs and will instead help you find an attorney that can take care of the paperwork for you.
It’s important to work with a good, reputable lawyer for this process. QDROs can be complex in many cases, so you need to be sure you are working with a true expert in the field.