Divorce is the end of your marriage, but it can also be the onset of many significant financial changes in your life. You will have to divide marital property, distribute jointly held debt and settle matters related to spousal and child support. Divorce will not only bring immediate financial changes to your life, it can also bring long-term changes to your plans for down the road.
You worked hard to build and save for your golden years, and a divorce will certainly impact this type of asset as well. While you can expect some impact from the decision to end the marriage, your divorce does not necessarily have to dismantle your plans for retirement. As you pursue a property division agreement that is reasonable and fair, Pennsylvania readers may find it helpful to understand the process of addressing retirement savings in divorce.
What is a QDRO and what does it mean for me?
A Qualified Domestic Relations Order is a term you may become familiar with over the course of your divorce. Essentially, it is a court order that outlines the distribution of assets held within a certain type of retirement account. A QDRO allows an alternate payee to receive payments from the account. In divorce, a QDRO allows an ex-spouse to receive the retirement assets to which he or she has a rightful claim.
The financial matters in divorce are complex, and the decisions reached during this process will affect your life for years to come. It is beneficial to understand more about QDROs and your retirement plans. Consider the following about QDROs:
- A QDRO is a court order that may be necessary to allow you or your ex-spouse to withdraw retirement assets out of a specific account.
- It requires updated information about all alternate payees, including contact information and mailing addresses.
- It outlines the percentage of the total amount in the account that an alternate payee can withdraw.
The process of distributing your retirement assets is a complex and potentially confusing process. With much at stake, you may find it beneficial to have experienced guidance from start to finish.
Mitigating the impact of your divorce
You have worked to build up your retirement savings, and you may already have plans for what you would like to do in your post-work years. Regardless of how close you are to this stage in your life, it can be helpful to take decisive action to protect your interests and minimize the negative impact a divorce can have on your financial future and retirement plans.