One of the most valuable assets a married couple possesses are oftentimes their retirement benefits. As such, the distribution of retirement benefits during a divorce is extremely important and can have a significant impact on the financial state of both parties. By utilizing a qualified domestic relations order, Oklahoma residents are able to allocate and use retirement benefits after or during a divorce in such a way as to pay for property division, child support, or alimony.
Oklahoma is an equitable distribution state, meaning that during a contested divorce the judge’s determination of what distribution of assets is equitable is subjective, rather than the equal distribution found in community property states. Oklahoma’s equitable distribution doctrine can leave significant leeway in determining which spouse is entitled to what percent of retirement benefits. Typically, retirement benefits cannot be transferred until after the beneficiary’s death. Oklahoma law circumvents this rule by allowing the use of a qualified domestic relations order in divorce cases.
A qualified domestic relations order, or QDRO, is an order issued by the judge which allows retirement benefits to pass from one spouse to another during a divorce as part of the division of marital assets. A QDRO allows for payment of property division, child support, or alimony. Under Oklahoma law, it is not sufficient to merely mention the retirement accounts in your divorce decree: a QDRO must be filed in addition to the divorce decree in order for a spouse to become legally entitled to all or a portion of retirement assets.
Qualified domestic relations orders are exceedingly complex due in large part to the tax ramifications of such an order, and must be crafted with extreme care. For instance, if a spouse is given retirement benefits outright or deposits those funds into a bank account, immediate taxes are due; but, if those benefits are deposited into another retirement plan, taxes will not be owed until a withdrawal is made.
In addition to complex tax ramifications, the requirements and stipulations of a QDRO can vary greatly depending upon the type of retirement plan you or your spouse possesses and whether you are a public or private employee. It is therefore paramount that you work closely with a qualified divorce lawyer who is experienced in QDROs to explain the process and ramifications of the order, as well as ensure that you receive the retirement benefits to which you are entitled.
Because a qualified domestic relations order is necessary in order to distribute retirement benefits during a divorce, Oklahoma residents should take care to ensure that their QDRO complies with state law as well as the requirements of your specific retirement plan. The qualified attorneys at Hensley Legal Services, PLLC can help guide you through the QDRO process and safeguard your financial future during a divorce. Call us today to schedule a consultation.