A recent Government Accountability Office report indicates that most couples in the midst of a divorce in North Dakota and across the country don’t divide their retirement assets because of red tape and fees. Better information from the Department of Labor on how to split retirement assets could help clear up this confusion.
Obtaining a portion of a former spouse’s retirement plan funds during divorce proceedings requires filing for and receiving a qualified domestic relations order, or QDRO. However, the process is complicated and requires a professional to file it. QDROs are usually done by actuaries and firms that deal with this process.
The fees associated with QDROs can be another deterrent as the actuary or firm handing the process sets its own fees. These can vary widely; there is no government recommendation as to what the charges should be for preparing one. High fees often discourage an ex-spouse from trying to obtain a QDRO, especially for lower-income individuals who may not be able to afford the fee.
The GAO report recommended that the DOL collect more information on fees involved with obtaining QDROs and educate the public on the process involved to obtain one. Doing so would eliminate confusion over the document and possibly allow more alternate payees to get a share of retirement funds.
Older couples planning to divorce should be aware of the QDRO process early in their proceedings. Although the order is another fee in what is often an expensive process, obtaining a portion of retirement income funds can help an ex-spouse in the long run.
Knowing what costs you’re facing up front can help you make obtaining a QDRO affordable. Paying fees now for money that you are entitled to may make you more comfortable later in retirement. An experienced attorney may be able to answer your questions about splitting retirement assets.