Maybe I am just getting old – or perhaps 30 to 40 years ago all this talk about 401(k)’s, IRA’s, QDRO’s, and the like were misunderstood by everyone. Whatever the reason, a lot of new clients are coming to me with questions and problems about retirement plans involving their ex-spouses. I am seeing all kinds of issues from plans that were never divided in the divorce to plans that were bought out by other financial companies to amounts being sent to the retirees that are wrong.
Here are some steps you can take to be proactive and make sure you get all that you are entitled to for those years you were married to your ex:
- Pull out the old Divorce Decree. Look for what you were awarded. Next, check to see if a Qualified Domestics Relation Order was signed. Then check to see if it was sent to the PlanAdministrator. If the retirement plan accumulated while you were married was an IRA or a Roth IRA, make sure it was divided at the time of your divorce. Finally, check the ages. Most plans allow someone to start drawing retirement when they reach the age of 59 ½. If your ex is above that age, then you can begin receiving your portion. Also, depending on your own financial situation, even if your ex has not retired but has gotten to the age the Plan allows for retirement, then regardless of what she or he does, you can start withdrawing the money for yourself.
- Check the Retirement Plans that were awarded. If you were awarded an interest in a retirement plan, check to make sure that the company is still in existence. If not, research online what happened to the company. This will save you money if you have to take legal action to protect or get your retirement since you will have already done the work the lawyer would have to do.
- Rethink employment during the marriage. Think back and write out each company your ex-husband or ex-wife worked for during your marriage and how long they worked there. Were they hourly or salaried employees? Again, research if those companies had any company retirement plans. It may be that this was overlooked or not disclosed in the divorce. If so, and it has not been withdrawn by your ex, Texas law says you still own your separate or community interest in that plan.
- Be snoopy. Pay attention to the mail you get from retirement financial companies. Don’t throw away this mail-away too quickly. I have had several cases where years after a divorce, retirement plans send out a mailing addressed to both parties and, lo and behold, when opened we find a retirement plan about which nothing was known.
- Visit with an attorney. Do a quick legal checkup on your retirement interests. This is a very complicated area of the law. Often, we see post-divorce changes in retirement plans done by the company or the Plan Administrator that change the terms of the plan or payout. We see plans where the names of the Plans in the Decree were wrong, and now the Plan is pushing back. We see situations where the Plan Administrator, years after the divorce, has read the QDRO and Divorce Decree differently than the parties. Or, heaven forbid, the lawyer drafted it wrong or ambiguously, and now the Administrator is interpreting what those documents layout differently than you, which can cause thousands of dollars to go to the wrong place.
The legal procedures for correcting mistakes, dividing undivided plans, and fixing wrong interpretations vary depending on the Retirement Plans, the length of time from the divorce, and other factors. The important point to remember is that not acting quickly after you find out about a situation with a retirement plan could cost you to lose your interest in that plan. So, don’t wait. Be proactive.
It’s hard enough nowadays to save up enough money to retire comfortably. Don’t let inattention or procrastination deprive you of your use of those monies that you own.