Retirement Rights and Divorce
- Historically many spouses cashed in retirement plans to be split at the time a divorce decree was granted. The process of cashing in a retirement plan prior to maturity is financially inefficient because the parties incur fees and taxes not otherwise imposed.
- Retirement plans and accounts provide a lifeline for people in their Golden Years. Courts strive to ensure that a spouse's rights to the benefits of these plans and accounts appropriately and equitable are protected for both a husband and wife.
Qualified Domestic Relations Order
- A qualified domestic relations order is a decree of the court that calculates the ownership interest each spouse has in an individual retirement plan. At the time of retirement, each spouse is paid a proportional interest through the operation of this supplemental order.
- The effects of a qualified domestic relations order is to ensure that both parties obtain the maximum benefit of a retirement plan and an an equitable share of the proceeds.
- The most common misconception is that each spouse automatically receives the full value of a retirement plan in that person's name at the end of a divorce case. In fact, each spouse has a legal interest in the contributions made to a retirement plan during the term of a marriage.