Many disputes during a divorce hinge on the equitable distribution of assets. Whether the divorcing couple is attempting to divide a family business, multiple properties or a priceless collection acquired together, these can be challenging times in the divorce process. Equally complex is the discussion of how to divide retirement accounts.
Over the course of a marriage, it is likely that one spouse contributed to retirement accounts at a greater rate than the other spouse. Whether this is a 401(k), a pension or another retirement fund, the argument will always be that "I worked to contribute to this fund - you didn't."
Unfortunately, this argument really doesn't hold water when negotiating the distribution of retirement funds.
If you haven't previously gone through a divorce, it is likely that you haven't heard of the acronym QDRO (pronounced as "quadro"). It stands for Qualified Domestic Relations Order and it is a document that a divorcing couple must complete to ensure that retirement accounts are accurately divided. These retirement accounts can be in the form of a 401(k), pension, IRA, military benefits, or another type of fund. The goal is to agree on an equitable split along with the other financial considerations in the divorce.
An experienced family law attorney can carefully review your specific situation and provide direction uniquely tailored to what you need, but the overview of the process is this.
When a 401(k), for example, is divided in the divorce decree, a certain portion is assigned to the non-account owner. This individual is typically referred to as an alternate payee. The alternate payee, then, must have a domestic relations order (DRO) prepared and presented to the judge. Following this, the plan administrator must review the document. If the DRO meets all of the plan's rules and regulations, it is qualified by the administrator and becomes a qualified domestic relations order (QDRO).
So, the answer to the title question is "yes."
Kind of. There is no set equation and you aren't automatically going to lose your hard-earned retirement funds. But, depending on the circumstances and numerous factors, your accounts will likely get divided.
Through either divorce mediation or a divorce decree, it is possible for your soon-to-be-ex to claim a portion of your retirement account. The professionalism with which this is handled, however, can directly lead to the efficiency of the process. When you work with a skilled attorney, you can be sure that your best interests will be protected.