Unfortunately divorced women are often the ones who end up being hurt in the process of dividing retirement assets. Women need to be aware and concerned about how this process happens and how it will impact their future. Although drawing to the close of your divorce can be somewhat liberating as you realize that this difficult emotional time will soon be put behind you, you should be aware that you should not lose focus as things draw to a conclusion. It is likely that the retirement accounts will be addressed in your divorce decree but this document alone is not enough to protect you and guarantee that you will receive these benefits. All retirement accounts that fall under the employee retirement income security act, also known as ERISA, will require an additional document known as a qualified domestic relations order. The plans that fall under this umbrella include 403(b) plans, pension plans, and 401(k) plans.
Your qualified domestic relations order is the official document that stipulates the division of retirement assets. Unfortunately, a qualified domestic relations order is highly subject to mistakes if you are not working with an experienced QDRO professional. It is important to understand that even when you have had the judge approve the QDRO document, you should also be concerned about the third party of the administrator of the retirement plan. Even in situations where the QDRO seems to cover all of the relevant possible situations of the future, the retirement plan administrator could still refuse to release any money to the spouse who is not paying into the plan. This most often puts women in the most vulnerable position since it is usually the woman who counts on getting benefits from her husband's plan. It is essential that the person putting together the QDRO reads through the entirety of the retirement plan for the employer and designs the QDRO with this in mind. Some of the key issues that need to be considered include:
- When does the non-plan owning spouse become eligible to receive benefits?
- What happens if the spouse owning a plan passes away before or after distribution start?
- What happens if the spouse owning the plan decides to liquidate it and takes a lump sum benefit?
- What happens if the spouse owning the plan names someone else as beneficiary of that plan?
- What happens if the spouse owning the plan names someone outside of the ex-spouse?
Finally, it is imperative that the QDRO be signed properly before the divorce is finalized. This is true even if the separation agreement outlines how retirement assets will be divided. If your qualified domestic relations order is not finalized prior to the process of divorce settlement, you could be facing unfortunate delays. During these delays there are many unpleasant situations that could emerge such as the spouse owning the plan passing away. A separation agreement cannot mandate that a retirement plan distribute assets to the ex-spouse which is why you need to have everything properly in writing and on the proper timeline in order for your QDRO to be accepted. Unfortunately mistakes are all too common even when your family law attorney understands the basic premise of a qualified domestic relations order. This is why attorneys frequently tend to network with a QDRO professional who can review the document and ensure that it carries out the stipulations of the settlement agreement as well as any requirements listed by the plan administrator. In this case working with an outside person who has knowledge about how QDROs typically proceed and the common mistakes that can be found inside them could be critically beneficial to your future. Women need to be especially careful of how the QDRO is put together so that they are protected. Since the retirement assets in a divorce are frequently some of the largest, it is important to take this process seriously.
Source : articlesbase.com
0 comments:
Post a Comment