Retirement assets are a significant part of many people’s financial portfolios. However, during a divorce, these assets may need to be divided between spouses. This process can be complex, and it is essential to understand the requirements of the state in which you live. In this blog post, we will discuss the process of dividing retirement assets in New York with QDROs.
What is a QDRO?
A QDRO is a Qualified Domestic Relations Order. It is a court order that divides a retirement account between the account owner and their spouse or former spouse. QDROs are required by law to be used when dividing certain types of retirement accounts, such as 401(k)s and pensions.
The Process of Dividing Retirement Assets in New York with QDROs
Identify the Retirement Assets
The first step in dividing retirement assets is to identify what assets are subject to division. Retirement assets may include 401(k)s, IRAs, pensions, and other types of retirement plans. It is essential to know the specific details of each plan, such as the account balance, vested percentage, and contribution history.
Determine How the Assets Will be Divided
Once the retirement assets are identified, the next step is to determine how they will be divided. New York is an equitable distribution state, which means that retirement assets will be divided fairly, but not necessarily equally. Factors that may be considered include the length of the marriage, the income of each spouse, and the contributions made to the retirement account.
Draft the QDRO
Once the division of retirement assets has been determined, a QDRO must be drafted. The QDRO should be prepared by an attorney who is knowledgeable about retirement plan law and should be submitted to the court for approval. The QDRO must meet specific requirements, including identifying the account owner and the alternate payee, the amount or percentage to be paid to the alternate payee, and the terms of payment.
Obtain Approval of the QDRO
After the QDRO is drafted, it must be submitted to the court for approval. Once the court approves the QDRO, it is sent to the retirement plan administrator for implementation. The plan administrator will review the QDRO to ensure that it complies with the terms of the plan and will distribute the assets according to the QDRO.
Receive Payment
Once the QDRO is approved by the court and the plan administrator, the alternate payee will receive payment from the retirement plan. The payment may be made as a lump sum or as periodic payments, depending on the terms of the QDRO.
It is also crucial to note that the process of dividing retirement assets with QDROs may have tax implications. For example, if a retirement account is divided through a QDRO, the distribution is not considered a taxable event for either spouse. However, if a retirement account is transferred outside of a QDRO, it may be considered a taxable event.
It is important to review and update beneficiary designations on retirement accounts after a divorce. If a former spouse is listed as a beneficiary on a retirement account and the account owner passes away, the former spouse may still receive the assets, even if the divorce settlement awarded those assets to the other spouse. Therefore, it is essential to update beneficiary designations after a divorce to ensure that the assets are distributed according to the divorce settlement.
As a law firm that specializes in family law, including the division of retirement assets with QDROs in New York, we can assist clients in all aspects of the process. We can help identify retirement assets, determine how they will be divided, and draft the QDROs to ensure compliance with the terms of the retirement plan.
We can also represent clients in court and work with retirement plan administrators to obtain approval of the QDROs. Our attorneys can advise clients on tax implications and update beneficiary designations on retirement accounts after a divorce.
At Jean M. Mahserjian, Esq., P.C., we have extensive experience in this area of law and can provide comprehensive legal representation to clients in Dividing Retirement Assets in New York with QDROs cases. We understand the complexity of this process and can help our clients navigate it with minimal conflict and a fair distribution of assets.
