A growing number of Indiana residents are deciding to divorce their spouses later on in life, and these individuals often have different divorce-related goals and objectives than those who split up earlier in life. Many older adults navigating divorce have concerns about retirement savings, in particular, and whether they are going to have enough to get by once they reach the age of retirement.
Per Investor’s Business Daily, the health of someone’s retirement accounts depends on several factors, among them the state of the markets and whether he or she is married or divorced.
Understanding what a Qualified Domestic Relations Order does
When someone is in a marriage with another party and that party has an employer-sponsored retirement plan, the non-employee does not automatically have access to his or her former partner’s retirement accounts unless there is a Qualified Domestic Relations Order in place. A QDRO is a type of court order that gives divorcing spouses certain rights to their former spouse’s retirement benefits.
Getting a QDRO
QDROs are somewhat complex and must follow certain rules and guidelines to hold up in court. Some of the information they must contain include the name and last-known mailing address of the party with the employer-sponsored retirement plan. The document should also stipulate how much of the funds in the account are going to go to the other party and how long the arrangement applies.
While some divorcing parties forgo getting QDROs in favor of asking their former spouses for a lump sum, this may be ill-advised. The savings in a retirement account tend to increase over time, and taking a lump-sum payment, rather than a stake in retirement savings, means the party doing so does not gain access to any interest.
