New York is a state where, at divorce, marital property is divided "equitably" between the spouses. Basically, "equitable" means "fair," and often marital property is not divided equally.
Unless a prenuptial or post-nuptial agreement states otherwise, assets acquired during the course of a marriage are categorized as marital property, which is subject to division between the spouses. Pensions, 401(k)s, IRAs, annuities and other forms of deferred compensation may all be divided in a divorce.
A number of factors should be considered when splitting the value of a retirement plan. One thing to understand is that most retirement funds these days consist of tax-deferred savings, so it is important to understand the potential tax impact of withdrawing funds from a retirement account.
If you are unsure of what you should do with the retirement assets to which you're entitled, then speak with an experienced property division attorney about whether it makes more sense to withdraw the funds, keep them intact, or transfer them to another account.
A Qualified Domestic Relations Order -- or QDRO -- can be used to establish an alternate payee's right to retirement savings. In the context of divorce, the alternate payee may be the spouse of a retirement plan participant. A QDRO may also name the participant's child or other dependent as an alternate payee.
A QDRO must include certain items of information:
- The names and addresses of the plan participant and each alternate payee
- The name of the plan or plans to which the QDRO applies
- The percentage, dollar amount or method of calculating the amount to be received by the alternate payee
- The time period or number of payments to which the QDRO applies
For more on divorce and equitable distribution, please see our divorce FAQ.