QDRO Attorneys Dividing Retirement Accounts in DuPage County
Naperville Retirement Account and QDRO Lawyers
A retirement account is one of the largest marital assets in many Illinois households. These items sometimes have an emotional value even greater than their fiscal value because they represent future financial security and a ready source of emergency funds. Each retirement account typically has its own set of rules and regulations for distribution. This is particularly true regarding public and private pension plan accounts as well as military retirement accounts. Further complicating matters, some accounts, such as a non-vested pension plan, may have little or no value at the time of divorce but a significant value in later years. The law recognizes and respects both economic and non-economic contributions to these plans.
Pesce Law Group, P.C. attorneys understand how important a retirement account is to an equitable marital complex property division. We routinely handle these matters in all area courts, so we are familiar with the procedural nuances, and we offer effective and forward-thinking solutions in this area.
Types of Accounts
Whether they are wholly employer-sponsored, composed entirely of private funds, or a combination of both, most retirement plans fall into one of two categories:
- Defined Benefits: Pension plans are not as common as they once were, but a number of public and private employers still use them, as they are often an effective way to attract and retain quality workers. Typically, the plan vests after a certain number of years of service.
- Defined Contribution: IRA and 401(k) plans are essentially tax-free, or tax-deferred, savings accounts. Many employers offer contribution matching as an employee benefit.
Every plan has a Plan Administrator who reviews the Qualified Domestic Relations Order (QDRO) and distributes the account accordingly. Typically, the division is based on the length of the marriage and the length of service. For example, if Wife has a $100,000 401(k) at XYZ Company after working there 20 years and she was married to Husband for 10 years, Husband would typically be entitled to $25,000, or half of half.
Distribution Options
Each plan has its own rules, but most alternate payees may elect either a lump sum or a share of future payments. A future split is usually the default option; usually, the alternate payee may not make additional contributions but can control the investment of funds in their shares. Under current IRS rules, a lump sum probably means taxes, but no penalties. Other spouses may elect to rollover the funds into their own retirement accounts, so they can continue making voluntary contributions.
To help ensure that you retain your fair share of a retirement plan, contact the savvy attorneys at Pesce Law Group, P.C. for a free consultation at 630-352-2240.
