People who are going through a divorce after a lengthy marriage have various interests to consider as they strategize in re: how they’re going to approach their divorce process. One of priorities is often what will happen with the couple’s retirement accounts. This is often a complex undertaking, especially if there aren’t two retirement accounts that are similar in value to scrutinize.
Most married people who are contributing to retirement accounts assume that their accounts and their partner’s accounts will all go to provide for a single household. When they divorce, those account have to be divided. Tennessee is an equitable division state, so the property division must be divided equitably (fairly), not necessarily equally.
Securing an order for division of retirement accounts
One limitation of a retirement account is that you can’t just pull money out when you feel like it. There are penalties to pay if you withdraw before retirement. People who are going through a divorce can transfer the funds to another retirement account without having to pay those penalties if they have a court order.
For retirement plans covered under the Employee Retirement Income Security Act, the plan administrator needs to have a qualified domestic relations order (QDRO) in order to move any part or all of the retirement funds. The QDRO must include very specific information, such as the division terms and identifying information for the plan participant and the payee.
Making sure that you fully understand the options available to you concerning retirement accounts when you’re ending a marriage can help you to that ensure you’re making decisions that are in your best interests. Working with a legal professional who can help you to determine how to proceed can be beneficial. Ideally, you’ll do this early in the process so you’ll have ample time to consider your options.