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What is a QDRO, and do I need one for my divorce?

If you or your spouse has a retirement plan, dividing the worth of that asset during divorce is more complicated than it may appear. It’s not a matter of simply writing, “Suzie and Joe each get half” and having the judge sign the paper.

To divide a pension plan, you need to have an official court order called a qualified domestic relations order (QDRO). This is a complex document with myriad provisions and requirements.

How are retirement benefits divided?

In Hawaii, retirement accounts are dividing according to a specific formula called the “Linson formula.” Essentially, it looks at how long you were married and how long the contributing spouse was vested in the plan.

When will I receive my share?

When you actually receive your share of the retirement benefits depends largely on the specific plan. It’s common to have to wait until the benefits are actually disbursed. However, even if you can’t receive the retirement benefits right away, it’s critical to create a QDRO now, during your divorce. If you don’t, you may forever lose your right to part of your spouse’s benefits.

Are there alternatives to using a QDRO?

Yes, you may choose to let one spouse keep all the retirement benefits in exchange for the other spouse receiving a greater share of other assets. For instance, you may agree that your spouse keeps his or her full pension, but you keep the family home.

Before you agree to any trades like this, however, it’s wise to discuss the ramifications with a financial professional. You don’t want to end up with a trade that will put you in a difficult position years down the road.

Do I really need an attorney to prepare my QDRO?

You may be tempted to use the sample language included with the retirement plan to create your own QDRO. Beware: most templates are designed with the good of the company in mind. If you are the participant employee – and especially if you are the nonparticipant spouse – your interests are not at the forefront. It’s important to work with an attorney who has your best interests in mind and who can skillfully protect your rights.

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