High Asset Divorce – Dividing Your Retirement Accounts

Posted on by Brandon

Posted in Assets, Child Custody, Divorce, High Conflict Case, Property Division, Real Estate, Spousal Maintenance

If you’re going through a divorce or legal separation, and you or your spouse have retirement accounts (IRA’s, 401K’s, Pensions) that need to be divided, you will need to hire an attorney to prepare a Qualified Domestic Relations Order, more commonly known as a QDRO, and have it filed with the Court.  A QDRO is an Order that directs the parties and the Plan Administrator of the retirement account as to how the account is to be divided between the parties after a divorce or legal separation.

Typically, the attorney handling your divorce or legal separation will NOT be the attorney to prepare the QDRO, since not all family law attorneys have the expertise to prepare and file a QDRO.  It requires specialized classes and training.

Max N. Hanson, Esq. has completed significant coursework and passed proctored exams and has been certified as QDRO Specialist by the American Association of Certified QDRO Preparers in order to be able to do the complex, difficult calculations and determinations that are requisite to prepare Qualified Domestic Relations Orders.   These qualifications in addition to his 25 year career as a family law attorney in Arizona make him an excellent choice to be the QDRO preparer in your case.

Will I need a QDRO?

Arizona Community Property Laws

In Arizona, all assets acquired during the marriage are presumed to be community property and should be divided equally 50/50 between the parties. “During the marriage” is defined as the period from the date of marriage to the date a spouse is served with the Petition for Dissolution of Marriage or Petition for Legal Separation.

Contributions to retirement accounts and benefits during the marriage, which include both monetary contributions by a spouse, matches by their employer as well as increased benefits to a pension as the result of years worked or purchased (“service time”), all are considered as community property or assets acquired during the marriage and are therefore subject to division in a divorce or legal separation.

If you were contributing to a retirement account before your marriage, anything earned up to the date of marriage is considered your sole and separate property. Likewise, any contributions made after the date of service are considered your sole and separate property.  Correctly calculating the contributions and market changes to the retirement account throughout the duration of the marriage can be complicated, and that is one of the reasons that the attorney that you hire needs to be specially trained in preparing your QDRO.

The Steps for Preparing and Completing a QDRO

In preparation of the QDRO, calculations are made as to the community portion of the specified retirement account and how it will be divided between the parties. These calculations can be complex and are best completed by an experienced QDRO attorney.

There are many steps to preparing and completing a QDRO, which include the following:

  1. The parties and their counsel or the Court will determine how the retirement assets will be divided. If an equitable agreement on how the retirement accounts will be divided cannot be reached by the parties, a Judge will make that ruling at Trial.
  2. A QDRO preparer will draft the QDRO (or other like order). Calculations will be made as to the community portion of the specified retirement account and how it will be divided between the parties. These calculations are complex and are best completed by an experienced QDRO attorney.
  3. Once prepared, the QDRO will be filed with the Court, then the Order will be entered by the Judge.
  4. Once the Order has been entered, it is sent to the Plan Administrator of the retirement plan for the purpose of executing the QDRO. The Plan Administrator will determine whether the QDRO meets the requirements of that particular plan. If it does not, the QDRO may be rejected and the parties will be required to go through the preparation process again to address the relevant issues.
  5. When the QDRO is accepted by the Administrator, they will implement the division and payment instructions according to the Order and the requirements of retirement plan.

Schedule a FREE, 30-minute Telephone or Zoom Consultation

If you are going through a divorce or legal separation, we are here for you.  The attorneys at Owens & Perkins have the skills and expertise to represent you in all areas of family law matters, including Qualified Domestic Relations Orders.  Call or text us today at 480.994.8824 to schedule your consultation.