In a New Mexico divorce, the parties must divide property and debt. One very important area of asset division is the division of retirement accounts. A Qualified Domestic Relations Order (QDRO) is a special form of court order that is issued during a divorce proceeding for the purpose of dividing retirement benefits.
Under New Mexico‘s community property laws, each spouse is entitled to 50% of the retirement benefits earned by the other spouse during the marriage. There are a variety of retirement plans that must be divided. The QDRO deals with several of these including pension plans and 401(k) plans. There are some that are not addressed by a QDRO. It is important to identify and classify all plans and account for them in the legally appropriate manner.
To start, the parties must identify each and every retirement plan that accrued during the marriage. The parties need to then determine the value of the retirement benefits at issue. Under the community property laws of New Mexico, only that portion of the retirement plan, or any other asset for that matter, that accrued during the marriage is considered community property and divisible as such.
Although one would think that the valuation and division of retirement accounts would be a rather clear-cut calculation, the division is often fiercely contested. Often experts such as CPA‘s and actuaries are required to assist in the valuation. On occasion, the valuation question will become a battle of the experts.
On the one hand, making an initial determination of values of 401(k) accounts can be pretty straightforward because they contain a clearly-identified amount of money. On the other hand, the value of pension plans can vary to a great degree depending on among other things how old the spouse is at the time of retirement and how much money the spouse is making when he or she retires. Other accounts such as defined benefit plans raise their own challenges.
After the value of a retirement plan has been calculated, the parties (or the court) must also figure out how and when the benefits will be dispersed. When it comes to certain 401(k) plans, the parties may be able to simply split the account at the time of divorce. In the case of other pension plans, however, neither party can receive their share of the plan until the working spouse actually retires
As with all family law matters, the division of retirement accounts can be accomplished through cooperation and compromise. Or it can be done through long, expensive and high conflict litigation. Though there will often be honest differences of opinion, these differences can generally be worked out through compromise. Either way, it generally helpful to have the counsel of an experienced divorce attorney.