
Division of Retirement Benefits at Divorce
Retirement accounts and benefits can be among the most valuable assets owned by parties who are divorcing. While parties can agree within their Separation Agreement to divide retirement assets between themselves in a particular way, the Separation Agreement itself is not a directive to the plan administrator (the person or company responsible for managing a retirement fund or pension plan on behalf of the participants) and will not suffice on its own to accomplish a division of retirement assets. Another separate order signed by the judge and sent to the plan administrator is necessary to effectuate the division of certain retirement benefits.
ERISA qualified retirement plans
ERISA (Employee Retirement Income Security Act of 1974) is a federal law that sets standards and provides protection for people participating in retirement and health plans in private industry. ERISA covers both defined benefit plans (pensions) and defined contribution plans (401(k), certain deferred compensation plans, and profit-sharing plans) offered by private employers. When a private defined benefit plan or defined contribution plan is divided as part of a divorce, a Qualified Domestic Relations Order or QDRO is needed.
A QDRO is a specialized court order that directs the plan administrator to allocate all … Keep reading