If you have a 401(k) retirement savings account, you may be wondering what will happen your savings during a Virginia divorce. While dividing a 401(k) plan isn't always quick and easy, there are strategies for making it more simple. Like any other asset a couple may own, a 401(k) may be included in the “division of property” portion of the divorce.
When it comes to financial issues, it's best to understand exactly what you and/or your spouse have and what your rights are even before you file for the divorce. That's why it's important to seek help from qualified professionals. During an initial consultation with a divorce attorney, it's a good idea to mention 401(k)'s and other savings and pension plans.
The way that a these plans are divided depends greatly on what type of plan it is. Different plans have different rules and regulations attached to them, and you need to operate within those specific guidelines when deciding how to divide the funds in the account.
Such accounts have strict rules as to how they can be divided, so special paperwork is needed in order to split them. In order to divide a 401(k), you need to have a Qualified Domestic Relations Order (QDRO, pronounced “quadro”). A QDRO is a document that reflects a judgment made by a court of law or other qualified state jurisdiction that dictates how the plan is to be divided following divorce. It allows someone other than the participant (in this case the ex-spouse) to receive a portion of the funds, or the entire fund.
While this may seem fairly simple, it often is not. QDRO's depend on the guidelines of the specific plan, and if vague or inaccurate wording is used when a QDRO is drafted, it won't be accepted by the fund administrator. That's why in some divorces, issues with QDRO may hold up the process of dividing the fund for a very long time.
There are other options available when dividing a 401(k) that do not involve drafting a QDRO. In many cases, the least complicated path is to have the spouse who is the participant in the account keep the fund in its entirety, while the other spouse is given assets of comparable value. If you're the spouse receiving the assets, you should take steps to ensure you're getting a fair trade. If the account will increase in value over time, will the assets you're receiving in exchange be of comparable value when all is said and done?
It's wise to speak with a financial professional before deciding which way you want to go. It's also important to have a Virginia divorce attorney on your side who understands the law and can point you in the right direction.
Contacting a Virginia Divorce Attorney
A Virginia divorce attorney at Hofheimer/Ferrebee can examine the specifics of your case to help you decide how much support to ask for, what child custody arrangement will work best for you and your children, and how to fairly divide your marital assets. Request a FREE copy of our divorce book for women in Virginia, or reserve your seat at our monthly divorce seminar – 757-425-5200.