Getting a divorce can be a testing time for anyone who could not have imagined things would end on that bitter note. While some people sail through this time-taking and complex procedure, others, who are not financially independent, are worried about their financial security once they part ways with their spouse. In such a scenario, especially if the couple is nearing the age of retirement, one must be well-informed about certain facts about pensions and divorce.
You have a share in the pension funds: After realizing that you are entitled to a share in your spouse’s marital property, regardless of whose salary contributed to the pension funds, you must start taking pro-active steps in order to avail the benefits that you rightfully deserve. Be it pension amount earmarked by the company based on the number of years served there, 401K contribution that is the regular payroll-cut from the cost-to-company salary, or other dividends and interests drawn on various financial schemes and plans, you are entitled to a chunk of the money, since it was initially meant for joint use, as a couple during retirement years. Please read up on the laws governing these plans in your state so as to make an informed decision.
Timely completion of paperwork is essential: Once you have decided to take a divorce, don’t waste time in visiting your spouse’s company benefits office and seeking the documents required, beforehand. You may need your attorney’s help in getting these important documents.
Go through the QDRO and submit it at the soonest: By acquiring a special court order called Qualified Domestic Relations Order (QDRO) and submitting it timely to the pension administrator of your spouse’s workplace, you can rest assured as the QDRO will now guide the administrator on how and when the pension funds are to be divided between both. Note that some specialised and flagship pension plans have a separate list of rules pertaining to these transactions.
Try to optimise your portion in the pension funds: Don’t forget to take into account any other returns on investment such as in social security schemes, and get all your doubts cleared and the inhibition dispelled. It’s your right, after all.
The more facts about pensions and divorce you discover and take into account, the better it is for you, and this would go a long way in securing your financial future. If you find the complex terms, conditions and rules hard to decipher, you can take the help of a financial analyst to explain you the nitty-gritty. Make your case strong with the right ammunition and don’t hesitate to avail all your rights for a financially sound retirement phase.