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Divorcing over 50? Consider a Qualified Domestic Relations Order (QDRO)

According to the Pew Research Center, the divorce rate among adults over 50 has doubled since the 1990s. Often referred to as “grey divorce,” this trend seems to stem from many different financial and societal factors. And while many older adults find they do not wish to spend their retirement years with someone they no longer love, there are unique financial challenges present in grey divorce.

One of those challenges is determining how retirement assets should be divided between spouses. With an asset pool that is closing or already closed, these funds are incredibly important for those near retirement age. The most common way to address this issue is through a Qualified Domestic Relations Order or QDRO.

What does a QDRO do?

Essentially, a QDRO is a court order that modifies a retirement plan to recognize an alternate payee for retirement benefits. It must include certain information, including:

  • Addresses of both the plan owner and the alternate payee
  • Percentage of funds going to the alternate payee
  • Number of payments and how payments will be made

A QDRO is tied to other payments typical in divorces, such as child support or alimony. Failure to follow the order can result in the same penalties as failure to pay spousal or child support.

Will I have to pay an early withdrawal fee?

Many people worry that if they divide retirement assets, they will have to pay the 10% early withdrawal fees attached to most accounts. However, even if you have not yet reached retirement age withdrawals through a QDRO are not subject to those fees.

With more assets at stake than younger couples, those facing divorce over 50 have significant financial challenges ahead. Consulting with an experienced divorce attorney can help, especially when it comes to drafting a QDRO.