Michigan couples who are getting a divorce might need to divide a retirement account. This process usually requires something known as a Qualified Domestic Relations Order. The QDRO is a complex financial document that should not be rushed through. People might want to hire a certified divorce financial analyst to walk them through the document and their choices to make sure they are getting a fair deal.
Ideally, a QDRO can facilitate an efficient transfer of funds at minimal cost. How much of the retirement account each person gets may vary depending on their own or a judge's decision. For example, a couple might decide that one will get the 401(k), which is worth $225,000, and the other will get the house, which is fully paid for and worth $200,000. While it may appear that the person with the retirement account has more money, this does not take into account that people cannot withdraw 401(k) funds penalty-free until they are least 59 1/2 years old.
In another case, a couple might divide a $2.2 million retirement account in half. A financial adviser might suggest that they use a tax-free rollover for $1 million and set aside the remainder for fees. Each might then begin building on the account again.
In a high-asset divorce, a retirement account might be only one of a number of valuable assets that must be divided. This can be a complex process if it involves businesses, valuable collections, real estate in other states and countries, and investments. In an amicable divorce, a couple might be able to negotiate property division, but on other cases, one spouse might suspect the other of hiding assets or negotiation might simply be too difficult, and the case may end up in court.