Contributing Author: Dianne Schechter, Paralegal
The divorce process is full of details, stress, and decisions. After the divorce is final, you and your divorce lawyer cannot drop the ball and ignore performance under the terms of the final judgment. If your final divorce decree or marital settlement agreement includes the transfer of retirement benefits, consider these helpful tips:
1. Contact and hire an experienced ERISA attorney who can help you decide the best course of action to take regarding the division of your retirement benefits. Experienced ERISA attorneys, who are familiar with complex employee benefits laws, can help you transfer any retirement plan assets by having a qualified domestic relations order (“QDRO”) (a separately required court order) prepared, signed by the judge in your case and properly approved by the retirement plan administrator.
2. Have all of the proper documentation you need to get your QDRO done correctly by providing your ERISA attorney preparing your QDRO with certified copies of the final judgment of divorce from the courthouse and a copy of your certified marital settlement agreement.
3. Provide your ERISA attorney preparing your QDRO with any retirement plan documents or statements that contain the proper name of the retirement plan, and allow your experienced ERISA attorney to provide accurate valuations of your portion of the retirement benefit to be divided by the QDRO.
4. Once the dust settles, re-read your final judgment to make sure you and your now ex-spouse have complied with all its terms, especially the terms regarding division of the retirement benefit(s) and any particular details involving those benefits (such as survivor benefits, beneficiaries, and death). If your spouse refuses to comply (which sometimes happens when it is time to sign the QDRO and file the order with the court) or simply won't comply with its terms timely or by certain deadlines, let your QDRO attorney and your family law attorney know. The lawyers can file a motion for contempt or a motion to enforce a court order against your uncooperative ex-spouse.
5. There are also potential tax consequences to consider with regard to transferring retirement benefits, which is one more reason why you should hire a seasoned ERISA attorney to prepare your QDRO to divide your retirement benefits. A tax-free transfer between spouses can be accomplished with the QDRO. The QDRO allows a spouse to rollover the retirement assets he or she receives by way of the QDRO to an IRA or other qualified plan account in their name. This allows the spouse, whose account the funds are being transferred from, to avoid any taxes associated with a distribution of the account, and properly transfers the tax obligation to the spouse receiving the transferred funds at the time he or she takes a distribution of their account.
Contact the experienced ERISA lawyers at Butterfield Schechter LLP with any questions concerning the division of your retirement benefits pursuant to a divorce or legal separation, or if you require assistance with the preparation of a QDRO or other domestic relations order to divide retirement benefits. We will worry about the details so you don't have to!