Spouses in Michigan who are divorcing will need a document known as a Qualified Domestic Relations Order if they want to divide a 401(k) account. Unfortunately, the costs for preparing such a document could be anywhere from $300 to $1,200 and more. Often, these fees are imposed by third party administrators.
In some cases, an employer will set up a 401(k) so that any fees are built into the plan. According to critics, many third-party administrators are overcharging in order to make a large profit. Administrators say that lawyers and others do not understand how complex the documents are and how time-consuming they can be to prepare.
There may be additional charges if any modifications are made to the documents. For example, changing definitions or choosing a distribution option not offered on the form could cost more than $1,000. Furthermore, fees may rise if a document is improperly prepared and thus rejected.
In a high-asset divorce, retirement accounts may be only one of many complex divisions that must be worked out. For example, if one or both spouses own a business, either might have the right to claim a share of the other’s company. Offshore accounts, investments, and out-of-state and international real estate are just a few of the assets that could further complicate the process of dividing property in a divorce. If one spouse has significantly more income than the other, the person with the lower income may be concerned about preserving their financial security. It is important for spouses to not let emotions interfere with the divorce process.