Divorce Pension Valuations

A pension is a valuable tax-deferred savings plan that allows employees to remain financially solvent through retirement. Because of their value, they are also an important consideration when planning the division of assets during the divorce process. Generally speaking, an employee adds to their pension via a monthly contribution (which is often matched by their employer), which accumulates on a tax-free basis until the employee retires, at which point they receive a specific monthly income for the rest of their life or they can withdraw their pension in one lump sum.

Given that pensions grow over time due to interest, how can a fair pension valuation be determined? The answer: You need the help of an experienced QDRO consultant who can help you navigate the complexities of fair pension valuation. At Divorce Financial Solutions, we are pension valuation experts. Our certified divorce financial analyst, Veralynn Morris, has more than 30 years of experience in the financial analysis and investment industries and can provide fair and accurate pension valuations for clients in Garrett County, Montgomery County, Frederick County, Washington County, Howard County, and Carroll County.

How is divorce pension valuation determined?

Because the value of a pension will fluctuate depending on how the stock market behaves, pension valuation requires a long-term view that takes interest rates into account. A few of the concerns that must be considered during the pension valuation process include length of time that an employee has contributed to their plan, how close they are to retirement, and whether a deferred distribution or immediate offset arrangement will be the most equitable basis for calculation. You’ll need the assistance of divorce pension and retirement expert to determine a fair valuation.

What is a QDRO?

A qualified divorce relations order (QDRO) is a legal judgment that orders a retirement account to pay benefits to a relation of the participant, whether that be a former spouse, child, or other dependent. The QDRO must contain specific information, including the names and addresses of the participant and the designee as well as either the percentage or amount of benefits that must be paid out.

When a former spouse receives QDRO pension benefits, their benefits are paid out as if they were the participant. This means that they are allowed to roll over their distribution tax-free as if they were the employee. An experienced QDRO consultant will be able to work closely with you to help you understand the implications and long-term effects that a QDRO will have on your future finances, whether you are the plan participant or the alternate payee.