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The Jere Beasley Report, August 2005
Retirement Accounts in a Divorce
Birmingham divorce attorneys helping clients with questions about the treatment of retirement accounts in a divorce
Retirement benefits in Alabama divorces are one of the more complicated issues, and its best to have an experienced Alabama divorce lawyer protect your interests. Details such as whether it is a defined contribution plan vs. a defined benefit plan may be important to your divorce attorney, and you may not know their significance. Additionally, specialized paperwork must be drafted to allow the court to order a division of retirement, and you will likely need the assistance of an experienced divorce attorney.
Often, the party with the retirement account feels like it is their property because they have earned it and managed it over the years to the exclusion of the other spouse. On the other hand, the other spouse feels like the only way the spouse with the retirement account was able to accumulate the funds was based on their sacrifice and support of the earner.
Alabama law attempts to address both concerns in determining an equitable distribution of retirement funds in a divorce. If a party has been married at least ten years, one spouse CAN receive a distribution of their spouse’s retirement account. This does not mean the court will do it, but does mean the court can do it. Also, any retirement that was earned prior to marriage cannot be distributed to the other spouse, even if the parties have been married over ten years. Under no circumstances is the Court authorized to pay the other spouse in excess of 50% of the retirement benefits of another spouse, regardless of the length of marriage.
If you seek to obtain a portion of your spouse’s retirement, you may be required to hire an expert to calculate the present value of the retirement benefits, and to instruct the court what proportion of those benefits, if any, were earned prior to the marriage.
What is a QDRO?
QDRO stands for Qualified Domestic Relations Order. These orders are utilized to notify a retirement plan administrator that a portion of the retirement plan of one party is being distributed by the Court’s divorce order to the other spouse. While QDRO’s work for many retirement plans, they are not always accepted. The most common example of this is in a military divorce. The federal government has their own procedure, and an Alabama QDRO will not effectuate transfer of retirement assets from one spouse to another in a military divorce.
You should also know that some retirement accounts are non-divisible. A common example of this is a public retirement plan such as the one administered through the Retirement Systems of Alabama, because this plan does not fall under ERISA. This should be considered in any property distribution plan.
The distribution of a retirement plan in a divorce is a complex issue that should not be attempted without expert advice. If you are considering a divorce, and you or your spouse has a retirement plan, contact the Birmingham divorce attorneys William White, and Jim Parkman at Parkman White, LLP to discuss your rights to the retirement account.