When you and your spouse decide to file for divorce in New York, it’s imperative to understand the assets and funds you are entitled to. Unfortunately, this process is not always as simple as calculating all joint assets and dividing them in half. Instead, you’ll find that certain assets, like retirement accounts, require additional documentation in the form of a QDRO to ensure they are divided fairly among each party. If you’re unsure what a QDRO is or why connecting with a Long Island property division lawyer is critical to fight for the funds you deserve, you’ll want to keep reading. The following blog explores what you should know about these matters.

What Is a Qualified Domestic Relations Order?

A Qualified Domestic Relations Order (QDRO) is a document that allows you to fairly and effectively divide assets held in a retirement account or pension plan to ensure that the spouse who does not own these assets can receive the funds they are entitled to as part of their divorce.

When you decide to file for a divorce in New York, it’s necessary to understand how assets are divided between you and your partner. Generally, if you cannot agree on how these assets should be handled, the court will step in. As such, New York follows the equitable distribution method of property division. This means that assets are not automatically divided evenly, as the court will examine several factors to ensure the division of assets is based on each spouse’s contributions to the marriage. One asset you are entitled to when getting a divorce is your spouse’s retirement plan.

It’s important to understand that any early withdrawals from these accounts, however, warrant a considerable 10% tax on the funds if the person is under 59 and a half years old. However, by utilizing a QDRO, you can make a qualified, penalty-free transfer, so long as you transfer the funds to a retirement account.

Finally, you should note that only certain kinds of retirement accounts are covered under a QDRO. You’ll find that only accounts covered by the Employee Retirement Income Security Act (ERISA) are eligible for an early withdrawal. This means IRAs and government Retirement plans are not included.

How Do I Create a QDRO?

It’s important to understand what the requirements are to ensure that your QDRO is legally binding. As such, it must include the following information:

  • The full legal name of the participant (paying spouse) and alternate payee (non-paying spouse)
  • The mailing addresses for both parties
  • The exact dollar amount or percentage of the account that will be transferred to the payee
  • The timeframe in which the payment will be sent

It’s important to understand that you may also want to include terms and conditions for certain situations that may arise. For example, you should determine what will happen should the retirement plan close or the payee pass away.

If you are going through a divorce, it is critical to connect with an experienced attorney to ensure you can fight for the best possible outcome in these matters. Your attorney can help ensure you recover all the funds you are entitled to during this process. At the Law Offices of Jay D. Raxenberg, P.C., our team is committed to helping you secure the assets you are entitled to during this process. When you need help, don’t hesitate to contact our firm today.