How does a Qualified Domestic Relations Order in New Mexico effect my retirement benefits?
Under New Mexico’s Divorce laws, divorcing couples must equally divide all property and debts. A Qualified Domestic Relations Order or QDRO is a separate form, issued for the purpose of diving retirement benefits for divorcing couples.
New Mexico‘s community property laws states that each spouse is entitled to 50% of the retirement benefits earned by the other spouse accrued during the marriage. Most couples have more than one retirement plan to be divided. The QDRO covers several of these including 401(K)s and pension plans. If something is not covered by a QDRO, it is important to classify and identify these plans and show legal documentation in a timely manner.
First, each spouse must single out the retirement plan that was acquired during the marriage. Each spouse then needs to calculate the value of the retirement benefits when issued. The Community Property Laws of New Mexico will allow only that portion of the retirement plan, or any other asset for that matter, to be divisible in the divorce.
It is not a simple matter and not unusual to bring in CPA’s and financial experts to assist in the valuation.
The initial accounting of a 40l plan can be fairly straightforward whereas the accounting of a pension plan will vary greatly depending on the age of the spouse when they retire and how much money the spouse is making when they retire. Other accounts such as defined pension plans raise their own red flags.
Next, the courts or both parties must decide when and how the benefits will be doled out. 401(k)s can normally be divided at the time of the divorce. Pension plans are more complicated as they can’t be dispersed until the spouse who is working finally retires.
At PJ Hartman, we try to settle all Family Law matters with compromise and compassion. The division of retirement accounts are no different. Our goal is work with everyone’s best interest in mind. Though there will always be differences of opinions, these differences can generally be worked out.