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Do I need a QDRO if I am going through a ‘gray divorce’?

“Until death do us part” is not the outcome of every marriage in the Montgomery area. However, getting divorced when your nearing or at retirement age — referred to as a “Gray Divorce” — looks very different from the divorce of younger couples in their 20s or 30s. For example, if your children are grown and out of the house, issues such as child custody and child support simply are not relevant. However, issues such as property division and alimony take center stage.

How is property division handled in Alabama?

When it comes to property division in Alabama, courts follow the rules of “equitable distribution.” This means that all marital assets and debts will be divided based on fairness, which may or may not lead to an exact 50-50 split. For older couples who have accumulated many assets over the years, such as a family home and retirement plans, property division becomes an important issue.

What is a QDRO?

Let’s look at the division of retirement assets. Depending on the type of retirement plan at issue, for example, a 401(k), it may be necessary to get a qualified domestic relations order (QDRO). The Internal Revenue Service (IRA) defines a QDRO as a court order for a retirement plan to pay spousal support or marital property rights to a spouse who is referred to as an alternate payee.

If a spouse is awarded part of their ex’s 401(k) through a settlement or court order in a divorce, a QDRO will be drafted and submitted to their ex’s retirement plan administrator. If possible, try to obtain the QDRO before the divorce is finalized to avoid having to reopen the divorce.

QDROs allow for the transfer of one spouse’s retirement assets to their ex in the property division process. This post only provides a brief overview of QDROs, and it does not contain legal advice. Those who need further information on QDROs will want to discuss the matter with a professional before proceeding.