Dividing Retirement Accounts in a Divorce

If you are getting divorced, you may have accumulated retirement plans during your divorce. Sometimes clients are surprised when they learn that the retirement plan that they have earned in their own name is subject to equitable distribution. Not only can your current spouse be ordered to be named your beneficiary in the event of your death, but they actually will be awarded a percentage of the benefits at the time of the divorce. It is important from the outset to obtain the plan documents from your plan administrator so that you know what options you have in the event of retirement on the selection of a survivor beneficiary as well as so you know under what terms a spouse can receive a distribution. In addition, just because your court order or agreement awards your spouse a percentage of your benefits, does not mean this is automatically going to be tax free. You must also have the order drafted in the form of a Qualified Domestic Relations Order. Most plan administrators have sample language that they will approve and it is a good idea to ask your plan administrator if they have sample language. You must always have your plan administrator approve the QDRO that is prepared before you send it to the Court to have the Judge enter it as an order.