How to Divide Retirement Funds During Your Illinois Divorce
Most couples will experience some sort of conflict during a divorce. For many couples, the asset division process is one of the topics that bring about the most conflict. Prevailing during this process is important, because it can determine how financially stable you are after the divorce, and it can also affect your finances into the future. For many people, their retirement savings are among their most valuable assets.
In Illinois, retirement funds are considered to be marital property as long as they were acquired during the marriage. Marital assets may include individual retirement accounts, non-qualified plans, defined contribution plans and accounts, and pension benefits. These retirement funds must be divided between divorcing spouses, which can become tricky. In most cases, this is done using a Qualified Domestic Relations Order or QDRO.
What Is a QDRO?
A QDRO is a legal document that defines how retirement assets will be split between spouses. It acts as a set of instructions to use when the time comes to disburse retirement benefits from qualified retirement plans, such as a 401(k). Using a QDRO to transfer these funds will allow ex-spouses to avoid taxes on these amounts or penalties for withdrawing funds before reaching retirement age
As a legal document, a QDRO is enforceable by the court, just like an order for child support or spousal maintenance would be. When the time comes for the retirement funds to be disbursed and used, the QDRO will specify who will receive the funds. In many cases, the alternate payee will be the account owner’s spouse or ex-spouse, but children or other dependents may also be named as beneficiaries. Information contained in the QDRO generally includes:
- Information about the plan owner and the alternate payee, including their names and addresses
- The percentage of the available funds that will be distributed to each payee
- How these percentages are determined
- The number of payments that each payee will receive
- How those payments will be disbursed to each payee
A Schaumburg Asset Division Lawyer Can Help You Protect Your Retirement Funds
Some people may overlook their retirement savings when they are going through the asset division process, especially if they are not close to retirement age. However, your retirement investments can be the key to your financial success in the future. At The Law Office of Nicholas W. Richardson, P.C., we can help you determine which retirement benefits may be considered marital property. We can also help you draft a QDRO to properly divide these assets. Contact our skilled Rolling Meadows property division attorneys today by calling our office at 847.873.6741 to schedule a free consultation.