Divorce can be unsettling for people of any age, but it can be especially frightening for people who are close to retirement. That is because the splitting up of retirement assets during divorce proceedings in Michigan can end up affecting individuals’ ability to retire as soon as desired. When it comes to protecting one’s retirement goals, it is important to make sure that a qualified domestic relations order, or QRDO, is filed during the divorce proceedings.
A QDRO is an order that explains how a 401(k) retirement plan should be divided in a divorce. When a person decides to dissolve his or her marriage, the person would be wise to speak with the administrator of his or her 401(k) as quickly as possible. This is essential because the plan might have certain options or requirements when it comes to dividing the plan’s funds with a spouse. In addition, some 401(k) plans allow the money to be dispersed once the divorce has been finalized, while others do not permit distributions to take place until retirement age is reached.
While in some cases it may be beneficial to split the retirement assets, it might be better in other cases to keep the 401(k) intact and instead allow one’s spouse to have other marital assets that are equal in value to his or her portion of the 401(k). It is also possible to roll over part of one’s 401(k) into the plan of the soon-to-be ex-spouse. People can also liquidate part of their plans to satisfy their divorce agreements.
The division of retirement assets in divorce, including retirement plans, can be tricky because of the number of options available to a couple. If a Michigan couple can work together on areas, such as property division, this can increase their chances of reaching a settlement that is pleasing to both parties. Otherwise, it will be necessary to take the matter to court, where a judge will decide how their assets will be split.
Source: newsmax.com, “9 Tips for Dividing Your 401(k) During a Divorce“, Jerry Shaw, April 27, 2015