Whether you’re nearing retirement age or not quite there yet, your retirement or pension plan is likely one of your largest and most valuable assets. If you and your partner are headed towards divorce, any of these savings earned by your or your ex during your marriage are subject to equitable distribution.
However, despite how significant retirement assets are in a marriage, many couples forget to file a QDRO (qualified domestic relations order) or put it off until a later date – especially if retirement is years away or you just want your divorce to be over with. A QDRO is a court-ordered document that allows an ex-spouse or other dependent to receive money from a retirement account.
While there are technically no deadlines on when you can file a QDRO, if you don’t file one with an experienced attorney during your divorce proceedings or immediately after your divorce has finalized, you could be risking a significant portion of the benefits entitled to you down the road.
Scenarios that can affect your benefits
Tempting as it may be to delay filing until you need the money or you retire, there are a number of scenarios that may result in losing rights to your entitled benefits, including:
- Your ex-spouse is fired or quits their job.
- Your ex-spouse gets remarried.
- Your ex-spouse passes away without a QDRO that locks in survivors’ benefits.
- Your ex-spouse retires without telling you and starts collecting their benefits.
- Your ex-spouse takes out a loan that dramatically lowers the account balance.
- Another former spouse of your ex-spouse claims the entirety of their benefits before you can file a QDRO.
Timing is everything when it comes to QDROs. If you do not act quickly, you could find yourself facing financial difficulties that you could have avoided.