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Chicago, Illinois Division of Retirement Assets Lawyer
Supportive Divorce Lawyer for QDROs and Division of 401(k)s, IRAs, and Pensions in Cook County
Getting a divorce will have a significant impact on your financial future, including your retirement plans. This is especially true considering that retirement accounts are often considered marital assets themselves, meaning that they may be split between spouses in the division of property. If you do need to divide an account, you may be at risk of losing substantial value if you do not handle it correctly.
At The Law Office of George J. Skuros, we have over 30 years of legal experience, and we have represented many clients throughout the divorce process to help them protect their retirement savings and other financial interests. We can help you reach a fair settlement with your spouse and take any steps necessary to divide your retirement accounts without suffering unnecessary losses.
Non-Marital and Marital Retirement Assets in Illinois
Married couples often have retirement savings in a number of different accounts, including IRAs, employer-sponsored 401(k)s, pension plans, and more. Some of these accounts may list both spouses as owners, while others may have been established in only one spouse's name. However, any of these accounts can qualify as marital property if contributions were made during the marriage. As a result, you could find that a retirement account that you thought belonged to you alone is subject to division in a divorce.
However, some retirement assets can be considered non-marital property as well. Contributions made to an account before the marriage or after a judgment of legal separation will belong to the spouse on whose behalf they were made, so it is important to keep detailed records of all contributions. Additionally, a prenuptial or postnuptial agreement can designate an entire retirement account as non-marital property.
QDROs and Other Options For Dividing Retirement Accounts
Even if a retirement account contains marital assets, it does not necessarily have to be split in a divorce. When there are multiple retirement accounts with similar value, perhaps one in each spouse's name, you could negotiate an agreement that grants one of them to each spouse and keeps them intact. However, if it is necessary to divide an account, simply withdrawing assets from one account and transferring them to another is usually not possible without triggering income taxes and early withdrawal penalties, which results in a loss of assets for both spouses.
Depending on the type of retirement account you need to divide, you should be sure to follow the correct process to do so without incurring these penalties. In the case of an employer-sponsored plan like a 401(k) or a 403(b), you will need to work with the court to obtain a qualified domestic relations order (QDRO). A QDRO lets the plan administrator know that the transaction is happening between spouses for an allowable reason related to the divorce. An Illinois employer-sponsored pension plan can be divided similarly by obtaining a document called a Qualified Illinois Domestic Relations Order (QILDRO), though distributions will not be made to a spouse until they are made to the employee.
On the other hand, dividing traditional and Roth IRAs between spouses usually does not require a QDRO. However, it is important to ensure that your divorce resolution clearly states the manner in which your IRAs should be divided so that the transaction is recognized as a transfer incident to divorce. Otherwise, you could be subject to early withdrawal and tax penalties similar to those you would incur when improperly dividing a 401(k).
Retirement Asset Division FAQs
Answer: A Qualified Domestic Relations Order, or QDRO, is a court order used to divide retirement benefits between spouses in a divorce. It is commonly needed for 401(k)s, pensions, and other employer-sponsored plans. Without a properly drafted QDRO, making withdrawals from a retirement account may incur penalties.
Answer: A 401(k) is usually divided through a QDRO that instructs the plan administrator how to distribute the funds between spouses. The court will determine what portion is marital property based on contributions made during the marriage. The QDRO will specify an amount or percentage that will be distributed to an ex-spouse. Taxes and penalties may apply if the account is divided incorrectly.
Answer: A lawyer can help identify which retirement assets are marital property and work to protect your financial interests during negotiations or litigation. An attorney may also coordinate with financial professionals and prepare or review QDROs and related documents. This can help reduce costly mistakes and delays.
Answer: A QDRO is generally used to divide private employer retirement plans, while a QILDRO may be used for certain public employee retirement systems in Illinois. Different rules and procedures apply depending on the type of retirement account involved. Some government pensions cannot be divided without a valid QILDRO.
Answer: Retirement account division can become complicated, especially when pensions, stock plans, or multiple accounts are involved. A lawyer who understands QDROs can help prepare accurate documents and avoid errors that may affect your financial future. Working with local counsel may also help streamline court filings and communications.
Answer: Retirement benefits earned during the marriage are generally considered marital property in Illinois. Contributions made before the marriage may remain non-marital property if they can be traced properly. Each case depends on the facts and financial records involved.
Answer: A pension earned during your marriage may be divided in an Illinois divorce. The court may award a portion of the pension to the other spouse based on the marital share of the benefits. The exact amount that an ex-spouse may receive will depend on factors such as the length of the marriage and the value of the benefits.
Answer: IRAs can be divided through a transfer incident to divorce rather than a QDRO. The divorce judgment and financial institution paperwork must be handled carefully to avoid taxes or penalties. The marital portion of the IRA is usually subject to division.
Answer: You may want to look for a lawyer who has experience handling complex property division and retirement account issues. At The Law Office of George J. Skuros, we have more than 30 years of legal experience with a practice devoted to helping families throughout Chicago, Cook County, and the surrounding towns and cities.
Answer: The cost can vary depending on the complexity of the retirement assets, whether the divorce is contested, and whether QDRO drafting is required. Some lawyers charge hourly rates, while others may use flat fees for certain services. Additional costs may apply for financial experts or plan administrators.
Answer: Mistakes when dividing retirement assets may lead to tax consequences, delays, or the loss of benefits. In some situations, correcting the problem may require additional court proceedings. Careful drafting and review of all orders and transfer documents is important.
Answer: A QILDRO generally remains in effect until the retirement benefits are paid according to its terms. Certain events, such as the death of the member or alternate payee, may affect how benefits are distributed.
Answer: In some divorces, spouses may agree to offset the value of retirement accounts with other marital assets instead of dividing the account itself. For example, one spouse may keep a retirement account, while the other may receive more equity in the marital home.
Answer: Contributions made before the marriage are often considered non-marital property if they can be clearly traced. However, contributions and growth during the marriage may still be divided during a divorce. Proper financial records are important when distinguishing between the marital and non-marital portions of retirement assets.
Answer: It is often helpful to involve a QDRO lawyer early in the divorce process, especially if substantial retirement assets are involved. Early review can help identify issues before the final judgment is entered. This may reduce delays and help avoid problems later.
Contact a Chicago, IL Retirement Asset Division Attorney
When dividing your retirement accounts for divorce, the counsel of a knowledgeable and experienced Cook County retirement asset attorney is crucial to help you avoid making costly mistakes. Contact us today at 312-884-1222 for a free consultation to learn how we can assist with your case. We serve clients in Chicago and throughout Cook County.
Serving Counties Across Illinois
From our office in Park Ridge, we serve clients throughout Cook County, including the North Shore and the Northwest Suburbs of Schaumburg, Arlington Heights, Mount Prospect, Des Plaines, Inverness, and more. Our services also extend to surrounding areas in DuPage County, Lake County, Kane County, and Will County.
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312-884-1222
1580 N. Northwest Highway, Suite 12, Park Ridge, IL 60068
From our office in Park Ridge, we serve clients throughout the Chicagoland area, including but not limited to Cook County, DuPage County, Harwood Heights, Rosemont, Schaumburg, Des Plaines, Elmwood Park, Norridge, Schiller Park, Lincolnwood, Edgewater, River Grove, Austin, Niles, Morton Grove, Skokie, Norwood, Logan Square, Bucktown, Oak Park, Wheeling, Hoffman Estates, Rolling Meadows, Palatine, Cicero, Evanston, Northbrook, Mt. Prospect, Elmhurst, Glenview, Humboldt Park, and the Loop, as well as Naperville, Wheaton, Lombard, and Glen Ellyn.
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