Dividing retirement assets is one of the most contentious parts of a divorce, especially later in life when a career is winding down.
A Qualified Domestic Relations Order (QDRO) is a divorce tool designed to split retirement benefits between spouses fairly. Both parties in a divorce should understand what a QDRO is and how to use it effectively.
What is a QDRO?
In the context of divorce, a QDRO is a formal court order dictating the division of retirement plan benefits between a plan participant and their spouse or former spouse. It is recognized by the Internal Revenue Service (IRS) and is essential for dividing retirement accounts, such as 401(k) or pension.
Purpose of a QDRO
Its primary purpose is facilitating the equitable division of retirement assets. Indiana follows the “marital pot” theory, which includes all assets acquired before and during the marriage up to the date of final separation. It means retirement benefits, even if accrued by one spouse, are part of the marital estate and subject to division.
The QDRO process in Indiana
The process of obtaining a QDRO involves several steps, starting with the proper drafting of the document. As you might expect, this is a task best suited for an experienced divorce representative.
Other steps include:
- The QDRO must be reviewed and approved by the other spouse’s legal team.
- Once both parties agree, the QDRO is submitted to the court for the judge’s signature.
- The signed QDRO is then sent to the retirement plan administrator for implementation.
Understanding the intricacies of QDROs is vital for anyone going through a divorce in Indiana, as it ensures a fair and legally sound division of retirement assets.
