What is the Role of a QDRO in an Illinois Divorce?
A qualified domestic relations order, or QDRO, is a legal document that is typically used in conjunction with a divorce decree in order to divide retirement assets between spouses. In the state of Illinois, there are specific rules that must be followed in order for a QDRO to be valid.
If you are going through a divorce and you have retirement assets, it is important to understand the role of a QDRO in dividing those assets. An experienced Illinois divorce attorney can help you ensure that your QDRO is properly drafted and filed so that your interests are protected.
Retirement Assets in a Divorce
When most people think about dividing property in a divorce, they think about vehicles, real estate, and household items such as furniture. However, retirement accounts must also be dealt with during divorce. In Illinois, retirement assets acquired during the marriage are considered to be marital property and are subject to equitable distribution. Retirement funds that a spouse already acquired before getting married are usually considered non-marital assets. Consequently, retirement assets may be considered partly marital and partly non-marital during a divorce.
The portion of the retirement assets that were acquired during the marriage must be divided fairly between the divorcing spouses. However, since retirement accounts can be complex, the process of dividing them is often times more complicated than simply splitting them down the middle. Sometimes, divorcing spouses negotiate a property division arrangement that assigns the entirety of a retirement asset to one spouse while the other spouse receives other types of property or assets in return. Other times, the retirement assets may be split evenly between the spouses.
QDROs Split Retirement Assets While Avoiding Negative Tax Consequences
A QDRO gives a spouse the right to a retirement benefit. The QDRO is filed with the retirement plan administrator and becomes a part of the divorce decree. Once the divorce is finalized, the QDRO allows for the distribution of a portion of the retirement assets to the spouse who does not have primary ownership of the account.
The advantage of using a QDRO rather than simply splitting the retirement assets in half is that it allows the division of the assets to be done in a way that does not cause any negative tax consequences. Early withdrawal from retirement accounts often comes with a hefty tax penalty. However, when the distribution of assets is done through a QDRO, there are no such penalties.
Contact a Joliet Property Division Lawyer
Our Plainfield divorce attorneys can help you divide retirement accounts and other assets in a way that reduces taxes and other negative financial consequences. Call Law Offices of Tedone and Morton, P.C. at 815-666-1285 to set up a free consultation.
Source:
https://insurance.illinois.gov/Applications/Pension/PublicDocuments/QILDRO/QILDROform.pdf
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