What Is a QDRO in an Illinois Divorce?

 Posted on August 31,2020 in Divorce

Retirement savings are some of the most valuable assets people can have, and dividing them during a separation or divorce can be complicated. Even with a precise division of assets defined in your divorce agreement, tax implications prevent that money from being dealt with properly. To get around this hurdle and ensure that a retirement account holder or provider can issue payments without the payee being penalized, you will need a Qualified Domestic Relations Order or QDRO.

When Is a QDRO Necessary? 

A QDRO can apply to child support, alimony, or property rights, but divorcing couples use them frequently to instruct a retirement plan provider on how to adhere to the division of assets outlined in your divorce agreement. For this reason, many retirement plan providers have their own QDRO forms that you can submit. Most people will use these standard forms, but if the division of the account is complicated, you may want to draft your own QDRO. Regardless of whether you take advantage of existing forms or draft your own QDRO, you should enlist the help of an experienced divorce attorney to fully protect your interests.

Without a QDRO, the payee could be penalized for withdrawing funds from his or her spouse’s retirement account into his or her own or for adhering to any other payout provisions. Although QDROs have a large reach when dealing with the division of retirement assets, they only apply to IRS tax-qualified retirement plans that are covered by the Employee Retirement Income Security Act. This means that if you or your spouse has a pension provided by the military or government, a QDRO will not suit your purposes, since those assets are governed by other laws. 

QDROs will differ depending on what kind of retirement plan you or your spouse have. Defined contribution plans such as 401(k) plans come with their own payment timing, so it should be easy to calculate when and how much to expect in each payment. On the other hand, if you or your spouse has a company pension plan, payments will not begin until normal retirement age.

Contact an Arlington Heights, IL Divorce Lawyer

Every element of divorce has the potential to be complicated, but you can eliminate unnecessary stressors when you work with the right Arlington Heights, IL asset division attorney. At the reputable family law firm of A. Traub & Associates, we strive to draft and enforce fair and sustainable divorce agreements and have extensive experience helping our clients with the division of assets and retirement savings. To learn more, call our Arlington Heights office today at 847-749-4182.

Sources:

https://www.thebalance.com/how-retirement-plan-assets-are-divided-in-a-divorce-1289260

https://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=004000050K1-119