Dividing retirement assets is often one of the most contentious parts of a divorce. Retirement benefits are usually substantial assets acquired during the marriage and typically subject to division under South Dakota’s equitable distribution laws. Assets held in employer-sponsored plans can be difficult and costly to divide, but a Qualified Domestic Relations Order (QDRO) is an important tool to help accomplish this goal.

A QDRO is a court order, judgment or decree that requires a retirement plan to pay alimony, child support or other marital rights. It grants one spouse rights to a portion of the other spouse’s earned retirement benefits in a defined pension plan or an employer-sponsored retirement plan.

An effective QDRO must contain certain information, including:

• The retirement plan participant and every alternate payee’s name and address
• The amount or percentage of the benefits that will be paid to each alternate payee
• The name of each plan identified in the order
• The number of total payments or duration of the court order

Ordinarily, withdrawing from or cashing out your retirement funds early results in significant penalties, including higher tax rates, financial sanctions and more. However, a QDRO prevents the 10-percent early withdrawal tax penalty when it is used for its assigned purpose.

Any court can issue a domestic relations order, but it becomes a “qualified” order once it is accepted by the applicable retirement plan. The plan’s administrator is required to determine what is qualified and then create a separate account for the other spouse.

A QDRO must also comply with several federal laws, such as the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974. An experienced divorce attorney understands how these laws work together and how to ensure your QDRO complies with applicable laws. It must also comply with the unique requirements of the retirement plan.

At Anker Law Group, P.C., our experienced divorce attorneys serve clients in Rapid City and throughout South Dakota. We are dedicated divorce attorneys who help with your QDRO and the division of all of your assets. Call us at 605-519-5967 today or contact us online for a free consultation.