When it comes to your divorce, the New Jersey courts will divide your marital assets between you and your spouse in a way that they deem as fair and just. However, certain retirement plans may not automatically fall under this asset division. This is why a qualified domestic relations order (QDRO) may be necessary. Read on to discover what is considered a QDRO and how one of the seasoned Hudson County family law attorneys at Greenberg & Walden, LLC, can assist you in drafting one.
What is considered a QDRO in the state of New Jersey?
By the Internal Revenue Service’s definition, a QDRO is a judgment, decree, or court order for a retirement plan that will pay for child support, alimony, and/or marital property rights to a spouse, former spouse, child, or other dependents. More specifically, in the case of a divorce, this judgment, decree, or court order, will require you, as the participant of a retirement plan, to have a portion of your retirement plan be assigned or paid to your former spouse or another dependant, otherwise known as the alternative payee.
A QDRO is commonly used in the case of a divorce because, without one in place, a retirement plan administrator cannot automatically split up your retirement funds between you and your former spouse. More specifically, once this is in place, a retirement plan administrator will be able to split up your 403(b) and your 401(k), among other qualified plans.
How does a QDRO work?
To reiterate, a QDRO will allow your former spouse to receive a predefined amount of your retirement plan assets which you earned over time through an employer-sponsored retirement plan. And once they are granted these funds, they can transfer them to an existing or a new retirement account in their name.
For example, your WDRO may pay out 50 percent of your account’s value that has grown throughout the course of your marriage. This 50 percent will then be transferred or rolled over into your former spouse’s existing or new IRA account. They may receive this benefit while you are still alive, but they can still receive survivor benefits in the unfortunate event that you have passed on.
How do I establish a QDRO?
If you would like to establish a QDRO in the case of your divorce, then you first must send a draft to your retirement plan administrator. Once it is accepted, they will submit it to the court on your behalf.
Importantly, as with any settlement agreement in a divorce, this process can get quite complicated. So, we recommend that you do not proceed any further without the assistance of one of the competent Hudson County family law attorneys. Pick up the phone and give our firm a call today.