The Division of Value

If you and your spouse have enough assets between you, you may be able to address the matter of one spouse’s retirement account by allowing the other spouse a more considerable portion of the additional assets. Further, if you and your spouse both have comparable retirement accounts, you may choose to walk away with your own. When these aren’t options, however, you’ll need to address the value of the retirement account another way. 

QDRO

A QDRO is a qualified domestic relations order made by the court that is meant to divide retirement funds upon divorce. They are a critical tool when it comes to preserving the retirement plan or investment’s tax advantages upon division. The account in question is very likely only in one of your names, but a QDRO can preserve the favorable tax standing of the account while allowing it to be divided – without experiencing early withdrawal penalties. 

QILDRO

If the retirement account is through the State of Illinois or the City of Chicago and is addressed by the State Employees Retirement System (SERS), the order needed is a QILDRO – or a qualified Illinois domestic relations order, which directs SERS to pay a portion of an employee’s retirement benefits to a former spouse. 

Points to Keep in Mind

When it comes to your financial rights as they relate to divorce and retirement or investment accounts, it’s important to keep all the following in mind:

• It’s important to address each retirement and investment account specifically – many people have multiples of each.
• Some retirement plans, such as pensions, are more difficult to assess in terms of value at any given time, which makes affording them more careful attention critical. 
• QDROs do not apply to most federal, state, and local retirement accounts, which is where the QILDRO comes into play.