How are retirement plans divided in a divorce and what is a qualified domestic relations order (QDRO)?
If a retirement plan (e.g., IRA or 401k plan) did not exist before marriage, then it is easy: the current value of the plan is community property that is divided accordingly. (See 4., above.) If the retirement plan was intiated prior to marriage, the community property portion is computed as follows: from the current market value of the plan subtract the market value of the plan at marriage. In other words, how much the plan has increased in value since the marriage is community property. The astute reader will notice that some of the increase in value may have accumulated as interest on the part that was earned prior to marriage. Even though the value of the retirement plan prior to marriage is separate property, under Texas law, any increase in value of separate property during marriage is community property. Note that this is true of any separate property (e.g., real estate, baseball card collections, or a Stradivarius violin), and not just retirement accounts. A qualified domestic
Related Questions
- I am not an employee, but am in the plan because of a divorce settlement (a QDRO — a qualified domestic relations order). Can I use GuidedSavings?
- How are retirement plans divided in a divorce and what is a qualified domestic relations order (QDRO)?
- What are Qualified Domestic Relations Orders (QDRO’s)?
