New Orleans Divorce Attorneys Assisting with Qualified Domestic Relations Orders
Handling retirement division in New Orleans and Slidell
When spouses divorce, they often focus on their immediate financial needs – the marital home, the bank accounts, their vehicles, and any businesses. Some of the most important community property assets are financial accounts that become due when one or both spouses retire. These future assets need to be reviewed during the property division phase of the divorce – and not years or decades later when the funds from these future accounts are actually available.
At the Law Office of James A. Graham, our divorce lawyers are skilled at assessing the current value of these future assets and determining how these assets should be divided. Future assets include any pensions, annuities, IRAs, 401ks, and any company or private accounts that vest or become available when a spouse retires or reaches a certain age. Our lawyers review which retirement assets can be traded for current assets, and what claims each spouse has to the other spouse’s future retirement accounts.
How can we help?
- What retirement accounts are divided when spouses divorce in New Orleans?
- What are the possible ways to split up retirement accounts in New Orleans?
- What is a qualified domestic relations order (QDRO)?
- What are the key requirements of a QDRO?
- What are the pros and cons of a QDRO?
- Do you have a retirement, pension, and QDRO lawyer near me?
What retirement accounts are divided when spouses divorce in New Orleans?
Louisiana is a community property state. That means each spouse has an equal right to the other spouse’s assets, including retirement assets. The main exception is if there’s a prenuptial or postnuptial agreement that includes the retirement accounts.
The main types of retirement accounts and benefits that are assets in a New Orleans divorce include:
- Pensions
- IRA accounts – traditional and Roth
- 403(b)s
- Qualified plans, such as 401(k)s
- Other types of government or private retirement accounts
What are the possible ways to split up retirement accounts in New Orleans?
The first step in dividing retirement accounts is to place a current value on their assets. Our New Orleans retirement accounts lawyers work with financial professionals who are skilled at analyzing what accounts each spouse has, when the accounts vest, the value of each account at the time they vest or the time a spouse can first withdraw or cash the accounts, and the current value of these accounts.
Once a value is placed on the accounts, we review with our clients whether they might want to trade off their right to a retirement account titled in the name of their spouse. In a trade-off, you waive the right to the retirement account in return for being able to keep the marital home, your business, or other assets.
If there isn’t a trade-off, then typically when the retirement account is ripe (the funds are available), then you obtain your share of the account through a QDRO.
What are the possible ways to split up retirement accounts in New Orleans?
The first step in dividing retirement accounts is to place a current value on their assets. Our New Orleans retirement accounts lawyers work with financial professionals who are skilled at analyzing what accounts each spouse has, when the accounts vest, the value of each account at the time they vest or the time a spouse can first withdraw or cash the accounts, and the current value of these accounts.
Once a value is placed on the accounts, we review with our clients whether they might want to trade off their right to a retirement account titled in the name of their spouse. In a trade-off, you waive the right to the retirement account in return for being able to keep the marital home, your business, or other assets.
If there isn’t a trade-off, then typically when the retirement account is ripe (the funds are available), then you obtain your share of the account through a QDRO.
What is a qualified domestic relations order (QDRO)?
According to Investopedia, a QDRO is a court order/decree that provides a portion of your spouse’s retirement accounts be paid to you or a dependent. A QDRO is a common way to divide retirement accounts in a divorce. A QDRO is required because the administrator of the retirement account needs a court order to pay someone other than the spouse named on the account – typically the other spouse.
At the Law Office of James A. Graham, our New Orleans retirement accounts attorney will explain when a QDRO is necessary, how the QDRO works, how the QDRO benefits you, and other related issues. QDROs are complicated. We work to simplify the financial terminology, so you are assured you are receiving your rightful share at the proper time.
Generally, you need a QDRO for qualified plans and other private retirement plans. There are different types of ways to distribute IRA accounts and accounts by public employers in your ex-spouse’s name.
What are the key requirements of a QDRO?
A QDRO in a New Orleans divorce must comply with the Employee Retirement Income Security Act (ERISA) and the domestic relations laws of Louisiana. ERISA is a federal law that governs employer-sponsored retirement plans.
A QDRO is the proper way to pay an alternative payee – usually the spouse of the person who worked to earn the retirement accounts through their company. With a QDRO, the alternate payee receives a predetermined amount of the retirement account of the worker.
The QDRO is used to pay for the value of the account during the marriage. If the person who earned his/her share of the retirement plan through employment, and began work after the marriage, then the other spouse has a claim to half of the entire retirement account. Adjustments are made if the worker began his/her job before the marriage.
A QDRO generally involves transferring the beneficiary spouse’s share of the funds into her/his own retirement plan or an IRA. QDRO distributions can also take place after the surviving spouse dies through the Louisiana succession process.
Our New Orleans QDRO lawyers may draft the plan or work with the standardized QDRO form that the plan administrator uses. The terms of the plan are reviewed by each spouse (through their lawyers) and with the plan administrator. Once the terms are acceptable, the plan is submitted to the court so the judge can make the QDRO official. If litigation is required, the judge drafts the QDRO and signs it.
What are the pros and cons of a QDRO?
Investopedia states that a QDRO helps ensure that the beneficiary spouse has her/his own retirement plan.
There are some tax benefits to a QDRO. By using a QDRO, there is no early withdrawal penalty for the transfer. The beneficiary spouse’s income isn’t taxed if the funds are placed into another retirement account. If the beneficiary spouse decides to take the funds as income, that spouse will need to pay income taxes – and an early withdrawal penalty if she/he takes the funds before turning 59 and a-half years old.
Some of the limitations/concerns of a QDRO are that there may be another QDRO if the non-beneficiary spouse was married before. Generally, a QDRO form includes the identifying information about each spouse and the dollar amount or percentage that is to be distributed. The QDRO should also address when the QDRO transfer can take place, what happens if either spouse dies before the transfer, and the types of payments.
The payments can be in the form of a lump sum or a transfer into your own retirement account. The payments could be spread out in installments. Other payment options may be available.
Our New Orleans QDRO lawyers will protect your interests, review the various options, and discuss the tax consequences for the various options.
An example of a QDRO is when Sue and Sam are divorcing after 20 years of marriage. Sam’s current 401(k) has $250,000 in it, of which $50,000 was in the 401(k) before marriage. If the marital property is divided equally, Sue would be able to obtain one-half of $200,000 ($250,000 minus $50,000), which equals $100,000 through the QDRO. Sue does not have any claim to any increase in the value of Sam’s 401(k) after the divorce is final.
Do you have a retirement, pension, and QDRO lawyer near me?
The Law Office of James A. Graham has two offices located in South Louisiana:
For clients who are unable to travel, we can schedule phone or video conferences when needed.
Call our experienced New Orleans divorce lawyers now
At the Law Office of James A. Graham, we understand the challenges of claiming your spouse’s retirement accounts and protecting your own retirement accounts. We’ll help you navigate these challenges by clearly explaining your rights, your options, and answering all your questions. We’re skilled at drafting, negotiating, and obtaining retirement settlements, QDROs, and property division orders.
Please call us or use our contact form to schedule a consultation. Our New Orleans and Slidell retirement and QDRO attorneys are ready today to fight for your economic security after a divorce.