What is a QDRO in a Texas Divorce? 

 Posted on October 05, 2021 in Divorce

Dividing marital property is generally one of the most difficult and contentious parts of a divorce. Couples, especially those who have been married for many years, have often accumulated a large number of valuable assets. Included in the assets that must be divided are individual and shared retirement accounts, such as pensions, 401(k)s, and IRAs. 

Spouses who earned pensions through decades of hard work may understandably feel upset about having to divide money they view as being rightfully theirs. Likewise, other spouses will have supported a working spouse throughout a career and feel entitled to their fair share of the retirement funds. It is important to understand how retirement funds are generally handled in a Texas divorce so divorcees can set reasonable expectations throughout the process. 

Are Retirement Benefits Always Divided Between Spouses? 

Individuals who contributed to a retirement account prior to getting married will generally retain ownership over that portion of money. But contributions made after getting married are considered community property and are subject to division in a divorce, even if only one spouse’s name is on the retirement account. Accounts can consist of both personal and community property. 

As long as a retirement account has funds that are community property, it will be divided or negotiated over during a Texas divorce. While it is sometimes possible for spouses to “buy out” their share of a retirement account by giving up something of equal value, such as cash or real estate ownership, other times dividing a retirement account is unavoidable. This is when a QDRO can help. 

What is a QDRO? 

A qualified domestic relations order, or QDRO, is a court order that entitles someone to receive retirement benefit payments from their former spouse’s retirement plan by working directly with the benefit provider. QDROs are not required, but they have many advantages, including: 

• Divorced spouses do not have to work with each other to give or receive payments

• Tax filing is easy and straightforward

• The receiving spouse retains some control over their portion of the retirement plan

A QDRO details how retirement accounts will be divided as well as how the provider will disburse the funds. There are legal limitations on QDROs, and certain changes cannot be made. Your divorce attorney can help you understand your options under Texas law. 

Speak with an Austin, TX Divorce Attorney

If you are facing divorce and have questions about the potential implications for your retirement, contact an experienced Travis County divorce attorney at Powers and Kerr, PLLC. We have worked extensively with even the most complex divorces, and we will handle yours with skill and careful planning. Contact our offices today to find out what we can do for you. Call us at 512-610-6199. 

Source:

https://statutes.capitol.texas.gov/Docs/FA/pdf/FA.7.pdf