A Qualified Domestic Relations Order is a necessary document for New Jersey couples who are getting a divorce and need to divide a retirement account. Because it is a complex financial document, they might want to work with a certified divorce financial planner to ensure that they are able to efficiently transfer funds. Without guidance, a QDRO could become costly.
Not every couple will decide to split the retirement account. However, those who make this decision should keep in mind that there may be disadvantages in keeping the account that they may not have anticipated. For example, in a divorce, one person might take the home, which has been paid for, while the other person might take the 401(k). If the retirement account is worth more than the house, it might initially seem as though that person got a better deal. However, the recipient may be unable to access the funds without paying a penalty until the age of 59 1/2.
In a different scenario, a couple may decide to split their retirement account equally. A financial adviser might advise them to set aside a certain amount to cover fees and to put the remainder in a rollover tax-free fund.
In a high-asset divorce, a couple might have retirement accounts that are worth a great deal as well as a number of other assets. If there is a business, the process could become even more complex because both spouses may have a claim on it even if only one has worked there. Dividing property may still be done through a process of negotiation involving their respective attorneys and other professionals, or the couple can turn to litigation if they cannot reach an agreement.