When getting a divorce, whether in New York or elsewhere, there are some assets that can be easily distributed without any penalties. However, asset division of certain accounts, like a 401(k) for example, can come with a pretty hefty price tag. In order to split retirements accounts a qualified domestic relations order (QDRO) is needed, but the processing fee can be significant.
According to a recent report, the price tag for processing a QDRO depends on the company handling the transfer. The average cost seems to be between $500 and $1,000. However, it can be significantly higher, especially if the form is not completed or filed correctly. Industry trends suggest that QDRO fees will only continue to increase.
Getting hit with a big fee when things are already tight financially, due to the nature of divorce, can be troubling in more ways than one. If the division of retirement accounts is wanted as part of a divorce settlement, there may not be any way to avoid QDRO processing fees. However, it is possible to avoid excessive fees by making sure QDROs are submitted error free.
Filing a QDRO form may not seem like a difficult thing, but as with all financial and legal forms, they can be difficult to understand and easy to botch. An experienced family law attorney will be able to assist divorcing couples in New York with filing the appropriate legal forms required for the asset division of 401(k)s and other retirement accounts. By seeking assistance with this, one will be able to achieve a smooth transfer of retirement account funds with the smallest fee possible.
Source: Bloomberg, "The Divorce Penalty: This 401(k) Fee Can Add Insult to Injury", Suzanne Woolley, Jan. 23, 2017