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.

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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.

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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!

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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.

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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 info@bpfamilylaw.com if you wish to discuss your particular situation as it relates to the drafting and filing of a Qualified Domestic Relations Order.

The information and suggestions contained herein are not to be construed as legal advice and may have been provided by a third-party source

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