Market Volatility and Your Post Divorce, Pre-QDRO, Marital Retirement Assets
What happens when you see a significant portion of your 401k, IRA, or other retirement assets diminish before it has been divided pursuant to a Qualified Domestic Relations Order? Is there anything you can do about it now that the Court’s are temporarily closed due to the Coronavirus pandemic?
This is a common question many of our clients have during these uncertain times. Luckily, there are certain measures that can be taken in order to mitigate some of these losses.
CONSIDER A TEMPORARY ASSET PRESERVATION STRATEGY TO MITIGATE THE MARKET VOLATILITY.
The plan owner spouse could re-allocate (not distribute!) the funds into a cash option within the retirement account to preserve the amount until they are distributed to the former spouse.
CHECK YOUR EQUALIZATION LANGUAGE.
Consider using the date of issuance of the Judgement of Divorce as the date to update all retirement account values attributable to post-commencement market forces. For example, if your agreement reads something like, “Upon equalization, Wife shall receive $100,000 from Husband’s IRA”, if all accounts are equalized as of today, by the time the Courts re-open, your Judgement of Divorce is issued, and the IRA custodian receives it, there may not be enough in the IRA account!
TIMING OF THE QDROS.
Despite not being able to file QDROs while the Courts are closed, it would be wise to have the QDRO pre-approved and ready to for the Court so that you don’t end up at the bottom of the pile once it re-opens.
Brian A. Picarello & Associates, P.C. are here to help you preserve as much of your assets as possible. Call us at 631-392-4949 or email us at firstname.lastname@example.org if you wish to discuss your particular situation as it relates to the drafting and filing of a Qualified Domestic Relations Order.