How Does the Division of Retirement Accounts in Maryland Divorce Work?
When couples separate, there is often an issue regarding how retirement will be distributed. Generally, in Maryland, retirement assets which have accrued during the course of the marriage are marital property. At your final divorce trial, the court has the authority to equitably divide retirement assets, regardless how such assets are titled. So how are retirement assets in Maryland distributed?
Once the court makes an award for retirement benefits, the Court will instruct that a Qualified Domestic Relations Order (or “QDRO”) be signed by the parties and/or their counsel, and submitted to the court. The Qualified Domestic Relations Order is a specific and technical document that must comply with the strict provisions of the retirement plan to be divided. Generally, once the QDRO is confirmed to have complied with the regulations of the retirement plan, the QDRO is submitted to the Court for entry and then submitted to the appropriate financial institution for division. If the retirement asset is a defined contribution plan (such as a 401(k), IRA, or Thrift Savings Plan), the financial institution will then contact the alternate payee (the spouse to receive retirement assets) to arrange for transfer of funds.
Often times, the alternate payee may wish to transfer the funds directly into his or her own retirement account. In this case, the transfer is fairly smooth and no taxes or penalties are assessed. If the alternate payee wishes to cash out some or all of the retirement assets, then he or she would be liable for any income tax assessed on the amount that is liquidated.
Division of retirement assets in a divorce can complicated. You should contact an experienced divorce attorney in Maryland to discuss your case and determine whether you may be entitled to your spouse’s retirement assets in a divorce.
Call the Law Offices of Brandon Bernstein at 240.395.1418 today to schedule your free in-person consultation. Whether you have more questions about dividing retirement accounts during a Maryland divorce, or any other financial or property matter pertaining to your divorce, we’re here to help.