Dividing Retirement Benefits in a New Mexico Divorce
Property division is a critical and often divisive process during a divorce. Some properties, such as marital homes, businesses, and retirement accounts, require special treatment during a divorce. Below are some things you should know if you are divorcing and have retirement benefits in New Mexico.
Community Property Laws Apply
The first thing to note is that New Mexico follows community property laws. In a community property state, assets you acquire before the marriage are separate property. Assets you acquire during your marriage are community property. If you divorce, you divide the community properties, and each person keeps their separate property.
Retirement benefits are subject to property division laws. Thus, you will divide the benefits you accrued during the marriage and keep the ones you accrued before the marriage.
A Spirited Contest Is to Be Expected
Many couples count their retirement benefits as some of their most valuable assets. As such, you should expect a spirited contest from your partner when negotiating the division of retirement benefits. Don’t forget that you have to determine:
- The benefits’ value
- The benefits’ period of accumulation
- The benefits’ division
Ideally, you should hire a team of professionals to help you with the valuation. You can hire professionals such as:
- Pension valuators
- Tax professionals
If you can’t agree, then the court has no choice but to decide for you. In such a case, the court will also rely on financial professionals’ input to value the plans.
A QDRO May Be Necessary
Depending on your retirement accounts, you may need a Qualified Domestic Relations Order (QDRO) to divide your retirement benefits. The QDRO, which you prepare with the court’s input, details the retirement account division. Retirement accounts have strict requirements that the QDRO must follow.
The Plan Administrator Has the Final Say
In most cases, you prepare the QDRO, get the court’s approval, and submits it to the retirement plans’ administrator. In some cases, you might need multiple QDROs before the relevant plan administrator’s approval. Such a complication is possible since, even if the court rubber-stamps your QDRO, the plan’s administrator still has the final say on the issue.
Type of Account Matters
Retirement plans come in different types. The type of account may determine the division process or technicalities. For example:
- For an IRA account, you are likely to divide the total amount in the account at divorce time.
- For a 401K account, you need a QDRO.
- For a pension fund, salient division factors include how long you worked during the marriage and whether you plan the division before or after the divorce. A QDRO is also necessary.
List all your retirement accounts when talking with your divorce attorney. The attorney will inform you of all the relevant laws and regulations you must follow.
Multiple Accounts Complicate the Process
As mentioned above, different retirement accounts have different requirements for the division. Thus, having multiple plans complicates the division process, especially if each of you contributes to different accounts. You will need to handle each account separately, and each may require professional input.
Professional Input From the Start Is Advisable
You can see how complications can arise when dividing retirement benefits during a divorce. The best way to get ahead of such divisions is to involve professionals from the start. In addition to a divorce lawyer, you should talk to financial professionals experienced in the division of retirement plans.
The above is just a brief overview of the critical things you should know. An experienced lawyer can give you more specific information about your unique situation. The Law Offices of Lynda Latta, LLC, can help you divide your retirement benefits. In fact, we can help you with the entire divorce process. Contact us as soon as possible to evaluate your circumstances and commence your divorce process.