Even though a couple in Alaska may have been married for years or even decades, it is not unusual these days for an older couple to decide to divorce. One issue that may be very important to older couples that might not be on the radar for younger couples is what will happen to their retirement accounts in the property division process. After all, both partners may have been putting money in retirement accounts for many years and may be counting on that money to be there for them in the near future.
What is a QDRO?
One popular type of retirement plan is a 401(k). Pension plans are also common. However, to divide these plans in a divorce requires a Qualified Domestic Relations Order (QDRO). QDROs allow for funds in the 401(k) or pension to be separated between the spouses and withdrawn without being penalized. The funds allocated to the non-employee spouse will then be placed in a retirement account in their name, usually an IRA.
When should I obtain a QDRO?
It is important to note that you may want to execute your QDRO before the divorce process is complete. For example, if receiving an immediate lump sum payment from a 401(k) or pension plan is not possible, the non-employee spouse can still pursue additional assets in the property division process that will tide them over until they can receive their share of the 401(k) or pension plan. If you wait until after your divorce is finalized to execute a QDRO and find out that an immediate payment is not possible, you will have lost the leverage to negotiate for additional assets.
Death can also present a problem. If the employee-spouse passes away after the divorce is finalized but before the QDRO is approved, the employee-spouse will be deemed to be single, and the non-employee spouse will not have the right to any of these retirement assets. Again, if the QDRO is completed while the employee-spouse is alive and before the divorce is finalized, this outcome can be avoided.
Attorneys in Alaska can assist with QDROs
Ultimately, QDROs can be complicated, so it is best to seek the assistance of a professional if you think you need one. The division of retirement accounts can significantly impact your future financial security. Attorneys in Alaska understand complex property division issues and can help you understand your options and rights so you can make informed decisions.