What is the role of a QDRO in a Colorado divorce?

| Jul 22, 2021 | Property Division |

Financial security after a divorce is an important goal. You have to know what to expect so that you can plan for the future. Unless you and your spouse signed a prenuptial or postnuptial agreement, the outcome of your divorce will depend either on your negotiations with one another or the way a judge views your marital circumstances.

Colorado has an equitable distribution law, which means that the judge considering your case should try to be fair in how they split your property. It also means that much of what you’ve earned during your marriage will be subject to division.

Few concerns about divorce make people as emotional as their retirement savings. Retirement accounts represent both a significant amount of someone’s earned wages and their plans for future stability. That’s where a Qualified Domestic Relations Order (QDRO) comes into play.

A QDRO lets you divide retirement accounts without penalties

Unless you have already reached the age of retirement, withdrawing funds from a tax-deferred retirement account will likely result in fees, taxes and penalties. Thankfully, those costs won’t be an issue after the courts determine how much of their retirement account each spouse should receive.

One spouse’s attorney can draft a Qualified Domestic Relations Order (QDRO) as long as the other one reviews and approves it. After the courts approve it and it’s submitted to the person or company managing the retirement benefits, what was once one retirement account will get split into two, with one held by each spouse and no penalties assessed against either.

Understanding the laws governing property division of all assets and debts in a Colorado divorce can help you make the best decisions you plan for your future after divorce.