How does a retirement plan divide during a Colorado divorce?

Colorado divorce laws require a fair or “equitable” distribution of your assets and property. Unless you have a prenuptial agreement, you and your soon-to-be ex-spouse could both receive a portion of a 401(k) or pension plan.

All income earned during a marriage belongs to your household. A family court judge generally considers how long your relationship lasted. Without both you and your spouse contributing together over the years, your retirement fund may not have grown. A judge may divide your plan based on the percentage of how much each spouse contributed to it.

What is a QDRO?

To begin the division process, your plan’s administrator needs to provide you with a qualified domestic relations order. As noted by CNBC, a QDRO is a separate agreement than the terms contained in your divorce decree. You could negotiate either one based on the value of each spouse’s contribution to the fund and household.

What if one spouse did not make a financial contribution?

When one spouse did not earn income or make a financial contribution to a retirement plan, the court determines what represents an equitable division. The court may view a spouse’s efforts in raising children or caring for a home as contributions that enabled a sole earner to generate income for the retirement plan.

Can I receive or make a lump-sum payment?

The court needs to approve of an equitable lump-sum payment that can serve as a buyout. You may provide records showing how much discretionary income went into it versus how much your spouse contributed. If your spouse only contributed support, the court may determine an equitable-value amount that could serve as a fair payment.

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