Introduction: Why QDROs Matter in Divorce
Dividing retirement assets during divorce can be one of the most complicated and emotionally charged aspects of the process. And when one or both spouses have a 401(k), like the Longbridge Financial LLC 401(k) Profit Sharing Plan, it’s critical to divide those assets correctly through a qualified domestic relations order, or QDRO.
Without a proper QDRO, you could face serious tax consequences, delays in payment, or risk losing your share entirely. As QDRO attorneys at PeacockQDROs, we’ve handled thousands of orders and know exactly what it takes to protect your interests. This article explains how a QDRO works specifically for the Longbridge Financial LLC 401(k) Profit Sharing Plan and the key issues divorcing couples need to be aware of.
Plan-Specific Details for the Longbridge Financial LLC 401(k) Profit Sharing Plan
When preparing a QDRO, it’s important to know the particular details of the 401(k) plan involved. Here’s what we know about the Longbridge Financial LLC 401(k) Profit Sharing Plan:
- Plan Name: Longbridge Financial LLC 401(k) Profit Sharing Plan
- Sponsor: Longbridge financial LLC 401(k) profit sharing plan
- Address: 61 South Paramus Road
- Plan Effective Dates: 2014-01-01 through 2024-12-31 (current active year is 2024)
- Industry: General Business
- Organization Type: Business Entity
- Status: Active
- EIN and Plan Number: Unknown (you’ll need to request these from the plan administrator when preparing the QDRO)
The Longbridge Financial LLC 401(k) Profit Sharing Plan falls under the category of employer-sponsored defined contribution plans. This means assets are held in individual accounts funded by employee contributions, employer contributions, or both. Knowing how each type is treated during division is key.
How 401(k) Assets Are Divided in Divorce
When dividing a 401(k) plan, a QDRO is required to legally transfer a portion of one spouse’s retirement account to the other (often referred to as the “alternate payee”). The QDRO must be approved by the court and the plan administrator. Here’s what matters most:
- The division method (percentage vs fixed dollar amount)
- Date of division (also called the valuation date)
- The treatment of investment earnings or losses after the division date
- How Roth accounts, loan balances, and unvested funds are handled
These elements need to be clearly spelled out in the QDRO so both the participant and alternate payee know what to expect.
Employee vs. Employer Contributions
The Longbridge Financial LLC 401(k) Profit Sharing Plan may include both employee and employer contributions. It’s common to divide the full account balance, but it’s important to verify whether any employer contributions are unvested. Typically:
- Employee contributions: Fully vested and usually 100% divisible.
- Employer contributions: May be partially vested depending on years of service.
If a portion of the employer contributions is not yet vested at the time of divorce, those funds might be excluded from the QDRO or forfeited later if vesting requirements aren’t met. That’s why the QDRO should state whether it includes vested assets only or the entire balance, with the understanding that some may be forfeited if they aren’t fully vested.
Loan Balances: A Common Trouble Spot
401(k) loans can significantly affect how benefits are divided. If the account holder has an outstanding loan at the time of division, it’s important to determine:
- Whether the loan amount is included or excluded from the alternate payee’s share
- Who is responsible for the loan repayment
For example, if the loan balance is $10,000 and the total account is $100,000, is the alternate payee receiving 50% of $90,000 or 50% of $100,000? This decision can lead to very different outcomes. Your QDRO must clearly define the treatment of any outstanding loan to avoid future disputes.
Roth vs. Traditional 401(k) Contributions
Another issue we often see in modern QDROs involves Roth 401(k) sub-accounts. These have different tax consequences compared to traditional pre-tax 401(k) money:
- Traditional 401(k): Taxable upon distribution
- Roth 401(k): Qualified distributions are tax-free if requirements are met
Your QDRO should specify whether both account types are being divided and whether the alternate payee receives a pro rata share of each. Mixing the two types without clear direction could result in tax confusion or errors during distribution.
What to Include in the QDRO
To divide the Longbridge Financial LLC 401(k) Profit Sharing Plan properly, make sure your QDRO includes the following:
- Exact plan name and sponsor: Longbridge Financial LLC 401(k) Profit Sharing Plan, sponsored by Longbridge financial LLC 401(k) profit sharing plan
- Participant and alternate payee personal information
- Method of division (percentage, flat dollar, etc.)
- Valuation date and applicable investment gains or losses
- Clear language about vesting, loan balances, and Roth/traditional distinctions
- Instructions on how payment should be made to the alternate payee (e.g., direct rollover or cash distribution)
Failure to include any of these could lead to costly delays or rejections by the court or the plan administrator.
Plan Administrator Requirements
Since the plan’s EIN and Plan Number are currently unknown, you’ll need to request those from the plan administrator when preparing the QDRO paperwork. Some administrators require pre-approval of the QDRO draft before it can be filed in court. At PeacockQDROs, we handle that process so you’re not left guessing what to submit.
The PeacockQDROs Difference
At PeacockQDROs, we’ve completed thousands of QDROs from start to finish. That means we don’t just draft the order and leave you to figure out the rest. We handle the drafting, preapproval (if applicable), court filing, submission, and follow-up with the plan administrator. That’s what sets us apart from firms that only prepare the document and hand it off to you.
We maintain near-perfect reviews and pride ourselves on a track record of doing things the right way. If you want to avoid common pitfalls, check out our guide on common QDRO mistakes.
Curious how long your QDRO might take? Learn more about the 5 factors that determine QDRO timelines.
Final Thoughts
If you or your spouse has an account with the Longbridge Financial LLC 401(k) Profit Sharing Plan, getting a proper QDRO drafted and executed is the only way to ensure those retirement funds are divided correctly and legally. With rules about vesting, loan repayment, and Roth sub-accounts, you can’t afford to get this wrong.
If your divorce was in California, New York, New Jersey, Connecticut, Kansas, Missouri, Iowa, or North Dakota, and you have questions about qualified domestic relations orders or dividing retirement assets like the Longbridge Financial LLC 401(k) Profit Sharing Plan, contact PeacockQDROs. We specialize in QDROs and have successfully processed thousands of orders from start to finish.
Get the answers you need—explore our QDRO resources or reach out for personalized help if you’re in one of our service states.