Retirement Plan

North Carolina Divorce Law Divorce and Separation Answers
1

Dear no6cgc:

Greetings. If your goal is to protect your retirement, you will likely have to distribute other assets to your wife in lieu of your retirement. My suggestion is that you hire an attorney who can do a financial analysis with their in house CPA for you, like the one we perform for our clients, and tell you all the options on how to protect your retirement. It can be done.

Also, is she asking for alimony? Thank you.

Janet L. Fritts
Attorney with Rosen Divorce
4101 Lake Boone Trail, Suite 500
Raleigh, North Carolina 27607
919.787.6668 main phone
919.256.1665 direct fax

10925 David Taylor Drive, Suite 100
Charlotte, North Carolina 28262
704.644.2831 main voice
704.307.4595 main fax

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service but a full discussion with an attorney should be undertaken before taking any action.

2

Yes alimony would be expected while wife is working on master’s degree, through June 2006. It is already agreed to split all other assets including house, current residence of wife. Husband will assume all financial obligations of college for four children, wife’s master’s degree and perpetual care for oldest, learning disabled daughter.

3

How does the QDRO fit in to the Retirement Plan. Is this as expensive as it seems to be in the literature I’ve read? Is it a relatively easy thing to do to accomplish a split or transfer of funds in the Plan?

4

Dear no6cgc:

Greetings again. First, if your goal is to save your retirement account, then you should not have agreed to an equal division of all other assets. A QDRO can be expensive and it is not a simple process, but QDROs are included in our overall fee.

Next, you should NEVER agree to perpetual care for a learning disabled child in a separation agreement. The court could not give you this obligation and it may affect public assistance available to her. Not to mention that in the future things can change, especially in retirement, so you should not agree in a separation agreement to a perpetual obligation which the court would not even obligate you to.

College is a moral obligation. You can committ to your children verbally, but I would advise against consenting to the college paragraphs.

Finally, yes legal expenses can be high, but your costs in not getting legal advice and having your separation agreement drafted by an attorney can cost you more. If you could meet all the really intelligent people that thought they were drafting their agreement correctly, but come in because it is not correct or they have not thought through all the tax consequences, you would be amazed. Best of luck.

Janet L. Fritts
Attorney with Rosen Divorce
4101 Lake Boone Trail, Suite 500
Raleigh, North Carolina 27607
919.787.6668 main phone
919.256.1665 direct fax

10925 David Taylor Drive, Suite 100
Charlotte, North Carolina 28262
704.644.2831 main voice
704.307.4595 main fax

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service but a full discussion with an attorney should be undertaken before taking any action.

5

The idea is not to protect my Retirement Fund. All assets of both parties will be subject to the 50/50 split. Why is the QDRO so expensive? If both parties agree to the divorce and the division of assets…why should fees be so high?

Also, can this be done prior to the completion of the separation. Can any of this be done on line? Would the divorce then automatically be granted on that one year anniveray date.

Thank you for all your very useful and quick responses.

6

Dear no6cgc:

Greetings. Please reread your first post which says “how to protect his retirement plan.” Now, you are saying the idea is not to protect the retirement fund. I am confused - so please clarify.

Now, QDROs are complex, they require a lot of time to draft, especially when the separation agreement is not properly drafted. After the drafting, you still have to file a friendly lawsuit, get the QDRO qualified, etc. It is a “process” not a task, so it is normally time consuming. The 401(k) and other retirement plans are tax shelters, so making a tax free transfer of these funds which does not hinder or harm the original tax shelter of the retirement account can be a difficult task, requiring continued communication with the plan administrator of the retirement plan and a lot of time.

No, QDROs cannot be done on line, since they are court documents. Yes the separation agreement can be done prior to the date of separation, but no, the QDRO will take more time after the date of separation, although the first draft may be completed.

Finally, please read over the divorce information on our main pages and then let me know if you have any other questions about the divorce. Thank you.

Janet L. Fritts
Attorney with Rosen Divorce
4101 Lake Boone Trail, Suite 500
Raleigh, North Carolina 27607
919.787.6668 main phone
919.256.1665 direct fax

10925 David Taylor Drive, Suite 100
Charlotte, North Carolina 28262
704.644.2831 main voice
704.307.4595 main fax

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service but a full discussion with an attorney should be undertaken before taking any action.

7

Sorry for the confusion. All assets of both parties are on the table for the 50/50 split. I was unclear about the connection between the Retirement Fund and QDRO. You have been very patient.

Last question. After the year long separation, and the QDRO is being processed through the system…is the couple legally divorced while this is going on once they pass the one year mark?

Again, many thanks.

8

From what I read, the parties can file for absolute divorce on June 2, one day after one year of separation. The divorce should be granted on or about 60 days (what would be the earliest time one can hope for this?). The division of property settlement continues after the divorce is granted. Is that correct? When can one expect all financial resolutions to be complete? How long does the QDRO process usual take?

I guess my question is…when do both parties part company and get to go their separate ways free and clear of each other?

Again, thank you for your help…its cleared up many questions.

9

Dear no6cgc:

Hello again. The couple can obtain a divorce while the QDRO is pending qualification, as long as they file an equitable distribution action first.

The earliest time is about 45 days from filing the divorce action. All the financial issues should be resolved well before the divorcec in the separation agreement. The QDRO process length varies depending on the terms of the separation agreement clause dividing the account, the plan administrator, how soon the QDRO is drafted, etc. When the parties are finally going their own ways free and clear of each other depends on each couple, their financial situation, if they have kids, etc. Thank you.

Janet L. Fritts
Attorney with Rosen Divorce
4101 Lake Boone Trail, Suite 500
Raleigh, North Carolina 27607
919.787.6668 main phone
919.256.1665 direct fax

10925 David Taylor Drive, Suite 100
Charlotte, North Carolina 28262
704.644.2831 main voice
704.307.4595 main fax

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service but a full discussion with an attorney should be undertaken before taking any action.

10

A 60 year old physician is separated from 50 year old wife getting her masters degree in nursing. While he is willing to split all assets 50/50 accumulated during 25 year marriage…how to protect his retirement plan worth approxmtely $400,000. Wife will be returning to work force once degree is attained. Where to begin protecting that one plan. Both parties are involved with new partners. Except for sporadic unemployment periods, the wife has worked outside the home. She had left the home on two occasions (for 3 months and then 18 months). After she returned to the house again for a year, husband moved out to own apartment June 1, 2004. Thank you.