Ladies, we are seriously behind when it comes to retirement savings – and divorce can make that picture even worse.

So if your husband has built up a sizable retirement nest egg during the marriage…and you haven’t…you’re probably entitled to a good portion of that money.

Due to complicated laws and taxes surrounding retirement plans (which include 401(k)s, 403(b)s, IRAs, and pension funds), it can be really tricky sorting this all out – especially the potential income tax hit. So before you agree to the divorce settlement, before you sign those papers, make sure you talk to a knowledgeable professional and have a crystal clear picture of all the tax implications for you.

How you take that retirement money will have a direct impact on your current and future finances. And for most women, the best way to go is with a QDRO.

QDRO stands for Qualified Domestic Relations Order


QDROs get issued by the court and served to your ex-husband’s employer.  Basically, this acts sort of like a direct rollover, where his plan administrator takes funds from his retirement account and deposits them directly into your retirement account. This is the only way to 100% avoid any tax penalties, which can steal up to 30% of your money. Plus, it’s a way to ensure that you end up with your fair share of the retirement funds.

Be aware: These agreements are complicated, and have to include specific information to be valid.

So make sure your lawyer knows what she’s doing – or consults someone who does – because dividing retirement accounts the right way can be tricky. If your QDRO isn’t perfect, you many not get everything you’re entitled to. And even if your divorce agreement says you are entitled to a portion of your ex’s retirement funds but you don’t have a QDRO, you may not be able to get that money at all.