Certain assets are harder than others to divide in a divorce. For example, your bank account has a fixed balance that you can easily divide in a fair manner while investment accounts fluctuate based on the market and could be worth less at the time of your divorce than they were just a month before you filed.
Retirement assets are often among the more complex assets that couples have to handle. Typically, the courts will issue a Qualified Domestic Relations Order (QDRO) as part of the final divorce decree so that the former spouses can fairly split the account without incurring penalties or fees due to early withdrawal.
Unfortunately, court closures recently have left spouses who should receive part of a retirement fund at a disadvantaged position.
Emergency withdrawals can diminish the value of a retirement account
Most of the time, people who want to take money out of a retirement account before they actually reach retirement age will have to pay penalties and fees for the privilege of accessing those funds before they should. QDROs are one of the only ways that people can split or remove funds from a tax-deferred retirement account without worrying about those penalties.
However, recent legislation intended to help individuals struggling financially during this unprecedented period in American history has authorized withdrawals from retirement accounts without penalty. People can take up to $100,000 out of an account that they usually could not touch under emergency provisions in the recent stimulus bill.
That could mean that your spouse is able to take up to six figures out of the account before the plan administrator splits it, potentially drastically reducing your share of that account.
You may even have to go back to court to get your fair share
Whether the judge ordered that you should receive a specific financial amount from the account or assigned a specific percent of its balance to be split off for you, losses due to a downturn in the stock market and your spouse making early withdrawals could impact what you receive.
It may become necessary to re-litigate the division of your retirement account and hold your spouse responsible for their attempt to diminish your share of those retirement assets if you find yourself in this untenable situation.