As you begin going through your divorce, one of the topics that will come up is how to divide your pension or retirement accounts. The order that you will need is called a Qualified Domestic Relations Order, or QDRO.
A QDRO is an order that a judge issues. This court order can be related to your retirement or pension and will instruct the plan on how to pay out a share of the account to the spouse who doesn’t hold it. A QDRO’s purpose is to protect you and may help you avoid paying penalties as you transfer funds to a new account or withdraw them completely.
QDROs apply to any tax-qualified plans covered by the Employee Retirement Income Security Act, but military pensions are treated differently. If a military or government pension is part of your divorce, then you’ll have to handle that based on the specific laws in place to govern distribution.
How should you divide your pension or retirement between spouses?
The way you decide to divide the plan will depend on your divorce settlement. Missouri is an equitable distribution state, so that means that you and your spouse will need to discuss an equitable way to divide these assets. The state does not require a 50-50 split, like some community property states would.
This can make things trickier for some divorcing couples. Some options you may have include:
- Dividing the assets equally between you
- Dividing the assets with a different split, such as 60-40 or 20-80
- Opting not to divide the retirement funds but to buy out the other spouse’s portion
- Giving up other assets in exchange for keeping the retirement account
- Each of you keeping your own personal retirement funds and taking them off the table completely
What you do will depend on the specific circumstances of your divorce. You will be able to go over the value of the accounts and consider if dividing them is the right option for you. If it is, then you may need legal help as you obtain the correct documents to divide those assets without paying penalties for doing so.