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QDRO or Buyout: Preparing Today for A Secure Tomorrow

By Theodore K. Long, Jr.
June 02, 2014

One of the most complex and difficult decisions a divorcing couple faces is the division of the pension rights accumulated during the marriage. Some 84 million Americans work for companies that maintain ERISA-covered retirement plans that are divisible by Qualified Domestic Relations Orders (QDROs), which guarantee the non-worker spouse (the non-owner) a share of the pension. Or the couple can opt for a buyout (sometimes called an immediate offset), by which one spouse trades away pension rights for another asset.

Often, both parties have their own pensions, and each may be entitled to share the marital portion of such pension. Generally, however, the husband's benefits are larger than those of the wife, who may have no pension at all or much smaller benefits because of years out of the work force.

The two most valuable assets a divorcing couple divide are the marital home and pension assets, but it is not uncommon for a thrifty couple who lived in a modest home for a long time to discover that the husband's pension may be worth more than the marital home.

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