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Protecting retirement funds in a high asset divorce with a QDRO

Texas is a community property state. This means that a married couple jointly owns all of the assets acquired or accrued during the marriage. In a high asset divorce, one of those assets is often a retirement account. Protecting those funds is often a priority.

Even if a Texas resident began the retirement account prior to the marriage, any accumulation during the marriage is typically subject to division. The spouse who is awarded a portion of the other spouse's retirement needs to obtain a Qualified Domestic Relations Order (QDRO). This will allow the awarded spouse to transfer his or her portion of the account into another retirement account while preserving its tax-free basis, thus avoiding any tax penalties for early withdrawal.

A QDRO could also allow a surviving ex-spouse to receive benefits from a deceased spouse's pension. The survivor's benefit is typically one-half of the total amount received by the other spouse during life. Without a QDRO, those benefits could stop upon death of the pensioner. Before presenting a QDRO to the court for approval, it would be a good idea to check with the plan manager (regardless of whether it is a 401K, pension or other retirement account) to make sure that it complies with the rules of the plan.

One of the most important aspects of a high asset divorce is property division. Whether it is a retirement account, home or some other asset or account, it is essential to remember that the work is not necessarily over once the final decree is signed. Each party needs to follow through with making any transfer of assets legal. The fact that it is listed in the divorce settlement as being awarded to one spouse or the other is often not enough. It is up to each party to make sure that the other complies with it.

Source:, "Don't Let Divorce Sabotage Your Retirement Plans", Arielle O'Shea, Nov. 7, 2016

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Law Office of Rebecca Anne Gonzalez
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San Antonio, TX 78216

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