Division of Retirement Plans in Illinois Divorce
Throughout your marriage, you and your spouse saved in anticipation of retirement. Your spouse put five percent of his/her monthly salary into a company funded retirement plan, which equates to 10 percent when including the company match. You both looked forward to retirement spending your golden years traveling, playing golf and relaxing. Now, however, you find yourself in the middle of a divorce. Most of your assets can easily be divided, except those retirement accounts, which are payable only to your wife. What can you do?
You can get a QDRO (pronounced quad-row).
QDRO for Dividing Illinois Retirement Accounts
Normally, benefits under a retirement plan are payable only to the individual whose name is on the account. When the wife retires, she will receive payments from the account. She may be able to designate another person to receive any funds remaining in the account after her death through a beneficiary designation, but during her lifetime, she is the only one who can receive distributions from the retirement plan.
This becomes a problem when the couple divorces. Assets earned during the marriage become the property of both husband and wife, so half the value of the retirement account belongs to the husband, even though the financial institution cannot legally make payments to him.
Enter the QDRO. A QDRO, or qualified domestic relation order, is an order that authorizes the financial institution that maintains the retirement account to pay a part of that retirement account to a third party. In this case, the third party would be the soon-to-be ex-spouse. The Court can enter an order that requires the financial institution to make payments to the husband. The QDRO can be a separate order or part of the general divorce order, so long as it meets certain requirements.
Depending on the type of retirement plan, one-half of the value of the retirement plan can be transferred to the ex-spouse now, or instead, when the wife is eligible to begin making withdrawals from the account, the husband can then be entitled to receive one-half of the monthly payment.
If the wife contributed to the retirement plan before the marriage, your attorney will need to determine the value of contributions made during the marriage, as pre-marital contributions are the wife’s separate property and not subject to division.
Palatine QDRO Divorce Attorney
If your marital estate includes any retirement accounts, you need a divorce attorney who understands the different types of retirement plans, valuation issues associated with each, and the requirements for a valid QDRO. Located in Palatine, and representing clients throughout Chicago’s Northwest Suburbs, the Law Office of Nicholas W. Richardson, P.C., is experienced in handling these very important assets. Contact the office today to set up a consultation.