When going through a divorce, your 401k and retirement plan is perhaps the most significant and complicated marital asset – because your 401k is something you’ve been consistently contributing to throughout the years of your marriage, it is considered as marital property. In this blog, our Las Vegas divorce attorney explains how a 401k is split in a divorce.
What is a QDRO?
Splitting a 401k is a process that entails three different steps. First, your divorce decree must order the division of your 401k. Secondly, your divorce lawyer will draft a qualified domestic relations order (QDRO) to tell inform your retirement plan’s administrator how to divide the 401k in a way that is in agreement with the Employee Retirement Income Security Act. Once the QDRO is approved and signed by a judge, it must also be approved by the plan administrator. After the QDRO is established and finalized, your spouse will be listed as an “alternate payee.”
Distributing the 401k
How your spouse chooses to collect his or her portion of your 401k is up to them. The funds can be rolled over into your spouse’s respective retirement plan or the funds can stay in your current 401k. Should your spouse choose to leave the funds intact, he or she will simply take payments once you retire. Your spouse also has the option of taking their share as a cash payment.
Possible Risks
If you are the spouse receiving benefits from your husband or wife’s 401k plan, it’s imperative that you and your divorce attorney file and submit your QDRO as soon as possible. Until the divorce is finalized, your benefits are very vulnerable – should something unexpected happen in the course of your divorce, you could likely lose your benefits.
Having an experienced dedicated Las Vegas divorce attorney on your side can make all the difference in your case. Call Leavitt Law Firm at (702) 996-6052 to request your case evaluation.