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QDRO and retirement plans: an acronym worth noting

Let's say for purposes of discussion that you're in the process of divorcing your spouse. That would hardly be unusual in Arkansas or anywhere else in the country, of course.

Moreover, it would be an especially mundane occurrence if you just perchance to be over the age of 50. Baby boomers comprise a large population pool, with an interesting characteristic of this group for family law researchers being the relative willingness of many of its members to file for divorce and embrace a new independence.

That intrepid view of the future -- yes, I can do this, even in my 50s and 60s -- makes baby boomers a singular demographic group when it comes to divorce, with increasingly more older couples splitting up than is the case for younger married couples.

Untying the knot at an age when -- in most instances -- the kids are fully grown and out of the house and retirement nears can be both bracing and stress-inducing.

Many divorcing boomers don't have a lot of years left in the workforce, or even plan on trodding down the employment trail. Given that, money concerns during divorce can be a huge issue, especially when one divorcing spouse needs an equitable disbursement from a partner's retirement accounts to make a solid go of it post-divorce.

In such an instance, divorcing couples might reasonably view that they can simply agree on the terms of a property settlement in their divorce, with such agreement directing an administrator of company-sponsored retirement plans to divide up sheltered accounts as ordered.

As explained in a government tract on retirement account distributions in divorce, that view -- despite being reasonable -- is incorrect.

In fact, a statutory process governs the release of money in employer-sponsored retirement plans (think 401(k) accounts, pensions, stock payouts, profit sharing and some bonuses) to so-called "alternate payees," which classically denotes a divorcing spouse.

A qualified domestic relations order (QDRO) must first be issued before any retirement-related adjustments can be made to such accounts.

An experienced family law attorney can explain how a QDRO works and its role in ensuring an equitable distribution of retirement assets in a divorce.

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