Retirement & Divorce

Are you divorced or going through a divorce?

Make sure you’re informed about the process of dividing a retirement benefit.

A retirement benefit can frequently be one of the largest assets in a divorce. This means that a share of a former spouse’s retirement benefits can be an important source of income in old age.  This is especially true for older divorced women, who are more likely to be poor in old age than men or married women.  Yet, even though retirement benefits can be divided at divorce, retirement plans are often overlooked at divorce because a divorce can occur years before retirement. And many divorce attorneys and family court judges are unfamiliar with how retirement plans work and the laws that govern retirement plans.

It is important to make sure your divorce addresses any retirement benefits in order for you to receive a share of most kinds of earned retirement benefit. Exceptions are Social Security and Tier I Railroad Retirement benefits.  Once your divorce is final it can be more difficult, and sometimes even impossible, to obtain a share of the benefit if it was not addressed in your divorce decree.

The divorce decree should specifically address both the retirement benefit(s) and any survivor benefit(s).  Keep in mind that your former spouse may have earned benefits from more than one employer and/or under multiple retirement plans at the same employer, and/or through a union.  Make sure that your former spouse has properly disclosed all of the retirement benefits s/he has earned, and alert your divorce attorney or the divorce court if you believe that your spouse is not providing all the information.

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A divorce decree alone is not enough. You also need an additional court order called a Qualified Domestic Relations Order (QDRO).

For someone to receive a share of a former spouse’s earned retirement benefits – such as a pension or 401(k) – both a divorce decree and an additional court order are necessary. The court order that provides for a retirement plan to make payments to a former spouse is called a domestic relations order (DRO).  Note that QDROs are not necessary to divide most individual retirement accounts (IRAs) and are only necessary for benefits provided by an employer.

As soon as possible, you or your former spouse must submit the DRO to the retirement plan, which has the legal right to approve or reject the order. Each state has different laws and each plan has different rules about how to divide retirement benefits at divorce. If your DRO meets the plan’s requirements, the plan will approve it. It then becomes a Qualified Domestic Relations Order (QDRO).

Private retirement plans will pay retirement benefits directly to divorced spouses if there is a QDRO on file.

You do not have to interact with your former spouse.  This is a major concern for survivors of domestic violence.  Survivors or their attorneys should also contact the retirement plan to make sure it knows not to disclose your contact information to your former spouse.  Note, though, that some state, city, county, and town retirement plans will not make direct payments to former spouses. See State Retirement Systems and Divorce.

Get a QDRO as soon as possible.

This is one of the most important things you can do.  Even if your divorce decree divides the benefit, your legal right to a share of your former spouse’s benefit is not guaranteed until a valid QDRO is on file with the retirement plan.  If your former spouse dies, remarries, or spends the retirement benefit before your DRO is qualified, you may not be able to receive the benefits you were granted in your divorce.

If the plan does not accept your DRO, make sure your attorney understands why, have it fixed, and try again as soon as possible.  Make sure you receive clear confirmation from the retirement plan that the DRO was accepted as qualified.

Find out if the retirement plan has a model QDRO.

Some plans offer model QDROs, which individuals going through divorce can use as a template.  If you are unable to afford to hire an attorney to draft a QDRO, a legal services attorney, the divorce court, or the retirement plan itself may be able to assist you in filling out the plan’s model QDRO if it has one.  Even if you can afford an attorney to draft your QDRO, a model QDRO is useful to have because it is specifically designed by the plan to meet its own qualification requirements.

The Pension Rights Center is working to solve the biggest obstacles to dividing retirement benefits at divorce

A fair share of a former spouse’s retirement benefit can often be an important source of income in old age, but many women never end up receiving the retirement benefits awarded to them at divorce. Meanwhile, divorced women are at significantly greater risk for poverty in old age than men or married women. We have launched an Initiative on Retirement Benefits at Divorce to identify why so many women are struggling to obtain the benefits they were granted at divorce, and to find solutions to these problems.  Learn more about the Initiative.

 

Retirement & Divorce Highlights:

Fact Sheets and Issue Papers
11/22/16 |Pension Rights Center

I’m getting divorced: What is a qualified domestic relations order and why should I care?

Legislation & Regulations
01/02/11

Documents for Divorce Proceedings

Fact Sheets and Issue Papers
12/21/10

Pension Rights After Divorce

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