If you and/or your spouse have a pension/retirement plan there is a good chance it/they will be subject to some form of equitable distribution.
Few areas of equitable distribution seems to strike a chord more than splitting a retirement plan, especially if one party has worked outside the home and the other party has not.
More than likely, if you are young, your retirement funds are not something you give much thought to. Going through a divorce will change that. As with every other decision you make concerning your divorce, what you decide about the division of the pension/401k will affect your lifestyle. The only difference is that you won't feel the effects until it's time to retire. It's important to keep in mind that what was once going to support one household in retirement must now support two. This is a good opportunity to see exactly what you have and what you will need for your retirement and start planning for your own individual retirement.
Pension plans are complex to say the least. Each plan is different. You and your spouse may be able come to an agreement on how to split it, but to obtain the valuation will require an expert. Depending on the type of plan that you have, the "real" value may differ from the value the court assigns to it.
The value of the pension/retirement plan will also vary depending upon when the funds become qualified for equitable distribution and as of what date the plan is to be valued. If you had substantial retirement prior to your marriage, that portion of it will be considered a pre marital asset. In addition the date to be used to determine the final value of the pension may be the date you and your spouse separated, the date the divorce petition was filed, or the date the divorce was granted. Your attorney would be able to answer these questions for you.
Pension/retirement plans are an asset and can be used as a bargaining chip when negotiating your final settlement agreement. But beware, trading off the pension for an asset may not be in your best interest. Remember the real value of the pension and the values assigned by the court are not always equal. Consult a professional before making any decision to give up your share of the pension.
The QDRO Quandary
A QDRO (pronounced 'quad dro' and stands for Qualified Domestic Relations Order) is a separate court order awarding a share of the pension to each party in the divorce.
Immediately upon filing for your divorce you must take action on the division of any pension that qualifies for equitable distribution. As the beneficiary of the plan you should contact the plan's administrator and request of the summary plan description. Once you obtain this description you can determine your rights under the plan. Each plan is different so you must find out the specific requirements of the pension in order to acquire your portion. It is your attorney's responsibility to prepare the QDRO. If the QDRO is not prepared according to the plans specifications it will not be honored. This will cost you additional money in attorney fees as well as putting your distribution at risk.
It is very important that all pension issues be settled before the divorce is final. Even if the pension is included in your settlement agreement and you don't get the QDRO when the divorce is finalized you will have to go back to court to obtain it. This may be putting your share of the pension at risk. In a recent court decision (Hopkins v. AT&T Global Information Solutions Co. No. 96-1363, US Court of Appeals, 4th Circuit, January 24, 1997) if the QDRO is not prepared and submitted until after the divorce, and your former spouse remarries and retires before the submission, the QDRO may not be enforceable. His or her current spouse would become vested for the surviving spouse benefit.
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