What is the process for dividing retirement and pension accounts in a Louisville divorce case? One of the most common mistakes people make when attempting to manage their own divorce is to miss the need to include pensions and retirement plans as part of the marital property division process. A single mistake in the paperwork associated with these issues can literally cost you tens, if not hundreds of thousands of dollars. Do you or your former spouse have retirement assets and accounts such as a 401(k), pension, profit-sharing plan, or a state or federal retirement account such as the Kentucky Teachers’ Retirement System (KTRS) or the Kentucky Public Pensions Authority (KPPA)? What is essential to know about retirement accounts in a Louisville divorce?
Most Louisville divorce actions will involve a pension or retirement plan of some type. You may not realize that retirement plans and pensions are often the most valuable and sizeable assets to be managed as part of the divorce process. This is why it is important to work with the experienced divorce and family law attorneys at Dodd & Dodd. We protect your rights and interests and make sure that every detail associated with the division of the marital asset and supporting paperwork is in order and successfully executed. The failure to meet the exacting requirements of each individual plan can literally result in the loss of a substantial amount of money.
Dividing retirement and pension accounts in a Louisville divorce is part of the process of marital property division. One of the important questions will be the nature of each retirement account or pension. Is this a marital asset, a separate asset, or a commingled/blended asset? If the account in question were opened during the course of the marriage, the asset would usually be considered to be marital property, subject to equitable division. If the pension or retirement account was obtained prior to the marriage and kept completely separate from marital funds, it may actually be the separate property of that spouse.
The legal documents responsible for the division of retirement and pension accounts are not only unique to each plan but also legally and financially complex. The document in these matters is called a “Qualified Domestic Relations Order” or QDRO. Each administrator and plan has their preferred structure and language before accepting the QDRO and executing the Court’s instructions. A QDRO is a detailed legal document describing the findings of the Court and how the plan in question is to be divided as a result of the divorce. This usually results in creating a new account for the other spouse, except in situations such as a military pension.
Marital property is to be divided equitably between the parties under the Kentucky family law code. Dividing retirement and pension accounts in a Louisville divorce often becomes part of a negotiated property settlement between the parties. It is not unusual for one of the parties to “offset” their former spouse’s marital interest in the retirement asset with some other asset or group of assets, such as the equity in the family home. Each case is unique, and it is essential to work with our experienced attorneys at each step of the process. Tax implications are associated with these substantial financial decisions. Dodd & Dodd will help you evaluate this complicated process and determine what is best for your unique circumstances and goals.
The net takeaway is this: It doesn’t matter what any settlement agreement or court decision may say. A pension or retirement account can only be genuinely divided through the execution of an enforceable QDRO. If the QDRO is not in order, the Court’s order will not suffice.
What are your primary concerns, goals, and objectives regarding your divorce? Our family has served the people of Louisville and surrounding communities for generations. You can depend upon sound advice and counsel, experience, tax insight, and effective, proven representation in your case.
We invite you to review the strong recommendations of our former clients and the legal industry and contact Dodd & Dodd or call 502-584-1108 to schedule an appointment with one of our attorneys. Learn more about dividing retirement and pension accounts in a Louisville divorce and how to protect your goals and interests.
