For older couples in New Jersey – those who no longer have minor children living at home – the most complicated part of a divorce case is oftentimes property and debt division. Indeed, with no need to address issues like child custody and child support, property and debt division may in fact be the only sticking point for older couples who are going through a divorce. And, among an already thorny issue to resolve, retirement accounts can be the real bump in the road.
Dividing retirement assets
A recent news article addressed some of the most common issues that divorcing older couples might face when it comes to retirement accounts. It starts with understanding what a qualified domestic relations order (QDRO) is and does when it comes to retirement accounts.
In short, a QDRO is a court order that provides instructions to a retirement plan on how to distribute assets among divorced spouses. And, although the recent article notes that QDROs can be fairly straightforward, there are pitfalls to avoid when these documents are drafted and implemented. For one thing, a QDRO isn’t needed for IRAs. IRAs are not part of the “qualified” retirement plans that the QDRO covers. A QDRO is needed for most other retirement accounts, particularly 401(k)s. And, the QDRO actually needs to be implemented once the divorce is finalized – get those funds split and get them re-invested to earn gains for your post-divorce retirement!
If you are facing a divorce in New Jersey, there will probably be many financial issues that need to be addressed in your legal case. But, for many people, retirement plans and savings are a big part of their overall assets. Be sure to address those assets correctly.