As half of a high asset couple, the pension or retirement plans you and your spouse have may well form a large portion of your overall assets. If you divorce, you and he or she must divide your marital assets, including these accounts, in a fair and equitable manner.
Smart Asset explains that if any of the pension or retirement plans you and your spouse own fall under the jurisdiction of the Employee Retirement Income Security Act of 1974. your divorce will need to include a Qualified Domestic Relations Order.
What is a QDRO?
A QDRO is a legal document drafted by your attorney, possibly with help from your CPA, that specifies how an ERISA-covered pension or retirement plan will distribute its funds after your divorce. It must adhere to all the rules and regulations applicable to the specific plan.
To help your attorney or CPA draft such a document, your wisest course of action consists of contacting the administrator of the plan in question to see if he or she can provide you with a pro forma QDRO. If so, your attorney or CPA can then follow the format of this form, making sure to include all of its specific languages. In other words, he or she must cross all the t’s and dot all the i’s. Failure to do so could result in nasty surprises in the future.
Unfortunately, a regular property settlement agreement cannot take the place of a QDRO. You will need both, and the judge will need to approve both. Thereafter, he or she can choose to attach your QDRO to your divorce decree or incorporate it therein.