Saving for a retirement is a lifetime goal that takes both time and effort. To ensure that you have sufficient assets to support yourself in your golden years, you and your spouse likely worked together to build up savings and investment accounts. If the two of you had children together, you may have chosen to split the labor, with one of you tending the home fires and the other earning income for the family's security.
Now that you are facing a divorce, you may be wondering what will become of your efforts. Is there enough to support the both of you? Does the law favor one spouse over another during property division? Are there guidelines in place in Michigan to help you protect your interests?
Am I entitled to a portion of my partner's retirement savings?
Unless there was a prenuptial agreement in place, you probably have a claim to some portion of your soon-to-be ex's retirement savings. A prenup may exclude you from having a claim to the funds, or it could have set terms for what funds are separate versus marital property. If you and your spouse accumulated the funds during your marriage, you are entitled to part of the balance.
What is a QDRO?
A Qualified Domestic Relations Order will help you when it is time to claim your portion of the marital retirement fund when an IRS tax-qualified plan such as a 401(k) holds the funds. The order, sometimes also known as a QDRO, is a court order that will instruct your ex-spouse's pension plan on how to distribute your portion of the payout to you. The order is separate from a divorce decree. You or your lawyer typically file the divorce decree and the QDRO together at the same time.
Other types of plans, such as government pensions, military retirement and IRAs are different than IRS tax-qualified plans. Some plans have their own rules, while the divorce decree settles the other types.
How will I receive the payout?
Your payout could come in a variety of ways. You could receive the money all at once in a lump sum, or you may receive periodic payments. Some plans will make monthly payments at your regular retirement age. The payout depends on the plan, and it depends on the settlement you negotiate with your ex-spouse.
The many legal intricacies associated with retirement plans during property division can be complicated, and you may be in need of much-needed help and guidance. QDROs are technical documents that must be correctly drafted. Not to mention, the decisions you make during your divorce may affect your lifestyle for years to come. An experienced attorney who understands the emotional and financial challenges you face during a divorce can help guide you through the process and ensure that all marital property is accounted for during the division of assets.