This is a common issue. In practical terms, funds held in retirement accounts and pensions aren't generally disbursed immediately upon divorce. The tax penalty for early withdrawals on a 401(k) is one reason. Another is that pensions usually don't pay out until your ex retires from service at the company. All of this may happen several years in the future.
- Because you're looking at a long-term future event, you must ensure that the divorce decree accurately represents your rights and interests.
Thus, you begin here, with the divorce decree: Read the original court order and any other documents. What do the documents tell you?
Look at the divorce decree or settlement document.
In some cases, clients don't realize that they are entitled to a portion of retirement pay or pension benefits in the first place. If you've been divorced for a number of years, it helps to revisit the original divorce decree.
- Your share should be represented by a formula directly on the document - often known as a qualified domestic relations order, or QDRO.
One type of formula calculates your marital share and begins to pay out at the time your ex-spouse retires from active duty (in the military context) or from service in the private sector.
Often, how long you were married is one of the most important factors in the calculation, in terms of the size of your marital share.
Have you been divorced for a number of years?
Again, start with the divorce decree.
Suppose that your ex is a service member, for example. If the document does not address military retirement pay, or does so poorly, you may have a problem. (You may also have a problem if the document does not address other military benefits, as well, such as the 20/20/20 rule or Survivor Benefits Plan coverage.)
Your best bet in this kind of situation is to call an attorney for advice. In some cases, a modification may help.
Are you just now heading down the path of divorce?
Now is the time to protect your rights and get the best advice possible. To learn more about our approach to properly dividing retirement accounts, pensions, and other types of property at Hendershot, Cannon, Martin & Hisey, P.C., click here to learn more, then call 713-783-3110.