Married couples spend much of their lives together, building and saving assets for a secure life after retirement. When they decide to get a divorce, retirement portfolios can be some of the most lucrative assets that are divided.
While Colorado awards most marital assets through “equitable distribution” – which doesn’t necessarily mean those assets will be split equally – couples must take an extra step for dividing qualified retirement plans, such as pensions and 401(k)s.
A qualified retirement plan, recognized by the IRS, is where investment income accrues tax-deferred and is withdrawn after the plan’s participant reaches retirement age.
When a divorce happens, a qualified domestic relations order (QDRO) is necessary to designate a portion of these benefits to a non-participant spouse, also known as the alternate payee.
The complexity of dividing retirement funds depends upon the type of plan:
Both participant and non-participant spouses can benefit from a court-approved QDRO. These advantages include:
If you are entitled to receive a share of your spouse’s retirement benefits, inform your attorney as soon as possible. Working with a knowledgeable lawyer is the best way to ensure that you receive your fair share.