During a divorce in the state of Illinois, property is divided on an equitable basis if it is left up to a court judge to make the decision. This means that each spouse will receive his or her fair share of the marital estate, but this does not necessarily mean that everything will be divided in half. You probably already know that things such as your checking and savings accounts, household possessions, and other tangible assets are all part of the marital estate and subject to the property division process. What you may not realize, however, is that other parts of your financial portfolio may also be subject to division, such as your retirement funds.
Retirement Funds Are Usually Marital Property
For many people, their retirement fund is one of the most valuable assets that they own. Even though retirement accounts are often funded with wages from your own job, any gain or increase in value of your retirement account that occurred during the marriage is considered to be marital property and therefore subject to division. Retirement accounts are different than normal checking or savings accounts, and the way you are allowed to access the money is more restrictive. Because of these restrictions, accounts such as 401(k)s and IRAs usually get special treatment during divorce.
Using a QDRO to Divide Your Retirement Accounts
Each spouse will most likely retain ownership of a retirement account that is in their name, but funds may need to be transferred in or out of these accounts during the property division process. This is especially true in marriages in which one spouse was the primary or sole breadwinner, and the other spouse did not have their own retirement account. When transferring funds in these accounts, a Qualified Domestic Relations Order (QDRO) should be used. This will allow funds to be withdrawn from an account without being subject to taxes or the standard 10% penalty for withdrawal before reaching retirement age.
A QDRO is a legally-binding court order that allows an alternate payee to claim all or a portion of the assets contained in certain types of employer-sponsored retirement accounts. The QDRO will contain information about you and your spouse, such as your name and contact information, along with the percentage of the account that goes to each of you, the number of payments to be paid, and how those payments will be made.
A Naperville, IL Retirement Account Division Attorney Can Help
QDROs are complicated legal documents that are best left to those who know what they are doing. At the Goostree Law Group, we have a team of attorneys who understand QDROs and who will work to make sure you are given the retirement funds that you need. Call our skilled DuPage County retirement fund division lawyers today at 630-364-4046 to schedule a free consultation.