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Using a QDRO to split a retirement account in an Illinois divorce

What are Qualified Domestic Relations Orders, and how do they relate to asset division in Illinois divorces? QDROs are used to give an alternate recipient the right to receive funds from a private-sector retirement account such as a 401(k) or a pension plan. The alternate recipient could be the plan participant's child, spouse or former spouse, so you can see why QDROs are important in dividing assets in the divorce process.

If a spouse started participating in a 401(k) or pension plan during the marriage, then the plan will be classified as marital property and thus subject to equitable division. Soon-to-be divorced spouses who want funds from such a plan should take the necessary steps to ensure that the QDRO is properly handled. An attorney can review this document prior the finalization of the divorce settlement.

There may be tax liabilities for the party named as an alternate recipient, so this issue should also be accounted for in divorce negotiations. Monetary penalties are also common when a retirement account is withdrawn early.

In general, it is important to review the QDRO to protect against any unwanted surprises. For example, do you plan to use your portion of the retirement money to cover costs in the short term? If you do, then it's important to know how the funds will be distributed. Different plans have different ways of distributing.

People in the Wheaton area may have heard of the "gray divorce" phenomenon among baby boomers. For many of these people, the value of retirement accounts is greater than the value of their homes and other property, so 401(k)s and pensions have played a bigger role in divorce than they did in past decades

If you would like to learn more about how marital assets are divided, please stop by our Wheaton divorce site.

Source:, "Your Assets in a Divorce," Loretta Hutchinson, July 22, 2013

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