Recently I was asked whether re-marriage can affect a person’s entitlement to receive retirement assets that were divided pursuant to a Qualified Domestic Relations Order as part of a divorce decree.  The answer is “No.”

Here’s the background: in Minnesota, assets acquired during a marriage generally are considered “marital” property.  Exceptions include inheritances, gifts made individually to one spouse and not to the other, and some components of personal injury settlements.  There are a few other exeptions.

In Minnesota, marital assets, including retirement assets are subject to an equitable division.  This includes retirement assets, including pension plans, 401(k) plans, IRAs, Roth IRAs, and other types of assets.

Generally speaking, IRAs and Roth IRAs can be divided rather simply, with a roll-over from one account to another account (in the name of the spouse receiving the asset).  Because of the way the internal revenue code is structured, pension plans and 401(k) plans require a more detailed treatment.  I believe this is because pension plans and 401(k) plans involve pooled assets.

To divide a 401(k) plan or a pension plan, the court needs to enter something that in Minnesota is called a “Qualified Domestic Relations Order.”  To put it simply, this is an order from the court to the plan administrator, telling the plan administrator to take a particular action, that is, to transfer all or part of an asset from one spouse’s name into the other spouse’s name.  (Keep in mind that this is an oversimplification, its a little more complex than this in real life.)

In Minnesota, the abbreviation for Qualified Domestic Relations Order is “QDRO.”  Once a QDRO has been entered by the court, it is served on the plan administrator.  The plan administrator then follows the directive of the recipient in either establishing a new account or transferring the assets.

Once the QDRO is approved by the court, it is final.  If a spouse receiving an interest in a pension plan or 401(k) remarries, he or she does not lose the benefit of the retirement asset that was transferred to him or her by a QDRO.  The property division became final at the time of the divorce.