For Texas residents who are getting divorced, the division of assets can be one more complication to deal with. In many cases, retirement accounts, an important part of the assets accrued during marriage, might be ignored during the settlement negotiations, especially if retirement seems like a far-away prospect. But overlooking retirement accounts can result in losing out on significant assets that can help ensure financial stability later on.
Understanding the QDRO
Retirement accounts cannot simply be divided by the court. To be able to receive benefits from an ex-spouse’s retirement account, a person must have a qualified domestic relations order, or a QDRO. An order issued by the court becomes a QDRO once the private or non-profit organization’s plan accepts the order. For this to happen, the order must have the required information and must meet the plan’s requirements about type and amount of payments.
Minimum requirements of a QDRO
While each plan’s requirements are different, all share a minimum amount of required information. This includes:
• The name and mailing address of the plan participant and the alternate payee, who is the other person who will receive payment
• The percentage of the payment or the cash amount that will be paid to the alternate payee
• How long the order will be valid for or how many payments will be made
• The name of each retirement plan that is addressed in the order
While it is recommended that people acquire the order during the divorce, it might be possible for someone to acquire a QDRO long after the end of the marriage if the retirement account was included in the original divorce decree. If you are negotiating the division of assets during a divorce, you may benefit from consulting with lawyer who can assist you through the process.
