A spouse’s interest in a retirement or pension plan may be divided upon the entry of a divorce decree. The portion of a retirement account or pension plan that was acquired during the marriage between the parties is subject to division at the time a divorce decree is entered, and the court will distribute one-half to each party unless the court finds that such a division would be inequitable.   There are tax consequences that must be considered and federal laws which regulate the allocation of a party’s interest in a retirement or pension; the Court must enter a Qualified Domestic Relations Order that is approved by the retirement or pension Plan Administrator and complies with ERISA (Employee Retirement Income Security Act) and the IRS code.

When a spouse has an interest in stock options which were acquired during the marriage, this too is subject to division pursuant to a decree of divorce. Pursuant to ACA 9-12-315 (a)(4), when stocks, bonds, or other securities issued by a corporation, association, or government entity make up part of the marital property the court shall designate in its final order the specific property in securities to which each party is entitled, or after determining the fair market value of the securities, may order and adjudge that the securities be distributed to one party on condition that one-half the fair market value of the securities in money or other property be set aside and distributed to the other party in lieu of division and distribution of the securities.

 When a person’s retirement accounts are divided pursuant to a divorce, the amount awarded is subject to Arkansas law. However, enforcement of this division must comply with the Federal laws under ERISA  and the IRS Code. Under ERISA and the IRS Code, retirement benefits may only be assigned to a spouse, former spouse, child, or other dependent if the Court enters an order, decree, or judgment that constitutes a Qualified Domestic Relations Order or “QDRO.”

A Qualified Domestic Relations Order is a domestic relations order that creates or recognizes the existence of an “alternate payee’s” right to receive, or assigns to an alternate payee the right to receive, all or a portion of the benefits payable with respect to a participant under a retirement plan, and includes certain information and meets certain other requirements.  A QDRO can assign interests in a retirement or pension plan towards child support, alimony or spousal support, and division of marital property rights.  After a QDRO has been drafted, it must be submitted to the Plan Administrator of the Participant’s retirement plan to be approved.

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