Dividing Retirement Assets In Divorce - Qualified Domestic Relations Order

Retirement funds acquired during the marriage are marital assets subject to equitable distribution.  

The first step is to get a valuation of the asset. Some pensions are not distributable until actual retirement such as the State of New Jersey Police and Firemen’s pension.  If a spouse is still working, a present value can be determined.   Also the monthly pension amount can be determined to identify the marital share of the pension upon retirement. Once there is a valuation, the parties can negotiate the distribution in a manner suitable to their needs.  

A QDRO is a Domestic Relation Order which is necessary to implement the alternate payees right to receive the portion of the benefits of the qualified pension plan. If one simply rolls over a part of his IRA for example to the spouse without the appropriate domestic relations order, he risks being taxed for an early withdrawal.  

What if a spouse dies before the marital share is distributed? Some pension plans allow for survivorship benefits.  This must be very carefully evaluated by the payor spouse because the survivorship benefits will reduce the pension benefit significantly.   Certain plans do not have pension survivorship benefits and in those cases like police or firemen the court will not order it.  If a policeman or fireman dies while he is receiving his pension, the pension stops. The parties who are divorcing or married people can consider life insurance.  This, too, can be very expensive since the retirees’ age may cause premiums to rise.  

Parties who are divorcing must address the distribution of the pension as well as life insurance. Each pension plan has a plan administrator. Detailed in-formation is available for specific benefits such as ongoing medical coverage, life insurance and survivorship benefits. The QDRO also addresses these choices.  

At Helfand & Associates we regularly deal with different pensions from i.e. Union’s, State of New Jersey, Police and Firemen’s, Military and Post Office.  We also help to divide, 401K’s, IRA’s, deferred compensation plans, annuities as well as other savings and retirement accounts.  Retirement funds are not the same as cash and there are tax consequences to consider.   Sometimes we can offset assets, sometime QDRO’s must be prepared.

For a free half hour consultation call Helfand & Associates at 973-428-0800, 0ur experienced matrimonial attorneys, handling all aspects of Family Law.

Tanya N. Helfand, Esq. is a Certified Matrimonial Attorney, a Mediator and Panelist in the Morris and Essex County ESP Programs.  The firm welcomes your questions and inquiries at [email protected]. We handle cases in Bergen, Essex, Morris, Hudson, Union, Somerset, Sussex and other New Jersey counties.