Identify these plans
A spouse may be eligible or receiving retirement benefits from their current or earlier employment. Settlements should identify each plan, such as a 401(k) plan or traditional plan, so that you may seek these benefits.
It is also important to identify whether your spouse worked long enough to have pension rights. Most plans provide benefits after five years of employment. Government employers have different rules.
Accrued or earned benefits
It is important to learn as much as possible about your spouse’s retirement plans before your divorce is final. But most plan administrators will not provide an employee’s plan benefit statement to their soon-to-be former spouse.
However, attorneys can have the participant spouse turn over that information or allow the plan to provide it through the discovery process or other means if necessary.
A summary plan description is an important source of information. An SPD discloses whether the plan has cost of living adjustments.
Court order to divide retirement benefits
A qualified domestic relations order issued by the court is required to divide pensions, as well as other retirement benefits. When divorce procedures begin, your attorney or the QDRO specialist recommended by your attorney can contact your spouse’s plan administrator for information about its QDRO procedures.
The divorce decree dictates how a spouse’s share is specified in the QDRO. The plan’s QDRO requirements govern the language describing how the shares will be allocated. These can be identified as a fraction or a percentage of the pension or retirement plan. Shares may be based on a total benefit earned on the separation date, the divorce date, retirement eligibility date or date of retirement.
Traditional employee retirement plans have a survivor’s benefit of 50 percent of the amount received. Former spouses may obtain these benefits if they were explicitly included in the order. Otherwise, their benefits may end with their former spouse’s death.
Attorneys can assist you with locating and placing a value on retirement benefits and other complex assets. Lawyers may help assure that your rights to this property are protected.