New Divorce Expense

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March 2, 2011

The cost of divorce has just gone up for some. Many types of retirement accounts require special court orders known as Qualified Domestic Relations Orders (QDROs) to divide up accounts. This has been an expense for some time, usually costing between $300 to $1000 per QDRO. Previously, retirement plans could not charge for the cost of implementing the QDRO, but under recent policy changes, those costs can be passed on to the account owner. These fees can add additional expenses of hundreds or even thousands of dollars on the cost of dividing retirement plans in a divorce. This is incentive for parties when dividing retirement plans to see if there are ways to cut down on the number of QDROs to equalize retirements. For example, rather than dividing all of the plans equally, it may be better to take an unequal share out of one retirement to equalize all of the plans, requiring fewer QDROs and thus fewer attorney fees and fees charged by the retirement plan itself. Additionally, if QDROs are needed, it might be a good idea to include language in the judgment regarding the division of any fees charged by the retirement plan. With increasing costs in transferring retirement assets, good QDRO planning may make it possible to reduce some of those expenditures.