A Qualified Domestic Relations Order (QDRO) can be used to divide up a pension and/or retirement benefits. It creates an alternate payee, who then gets a percentage of the total payout.
This is huge in divorce. Even though many people don’t realize it, they may not have any assets that are realistically as valuable as a pension. It likely pays out for life, it provides financial security and it could wind up paying out far more than the value of a home, a car or any other “big ticket” assets.
So, who can be named as the new payee by a QDRO? The government is fairly strict with this, and the person has to be a spouse to the initial payee, an ex-spouse, a child or another dependent. That’s it. The money is typically used for obligations regarding marital property or to provide family support.
Just how important can this asset be? People often focus on the assets they can see and touch already, especially if both people are still working and not getting the pension yet. However, it’s important to think about the future when going through a divorce. How much income does that pension provide every month? Were you counting on it so that you could retire on time? What would you do without those future payments?
While all pensions are different, you may find that no asset is more worth fighting for when you’re trying to create that future financial security. Be sure that you know all of your rights and what legal steps to take to make sure they are honored.
Source: Department of Labor, “QDROs The Division of Retirement Benefits Through Qualified Domestic Relations Orders,” accessed Sep. 28, 2017