“Adjusted for gains and losses.”
It’s some of the most common language in divorce settlement agreements involving retirement accounts. It’s also some of the most dangerous — because it doesn’t actually answer the question everyone assumes it does.
I’m on a case right now that illustrates the problem precisely. The agreement used that exact phrase. Standard language, nothing unusual. Everyone assumed the plan would handle the mechanics. Then, after signing, the plan owner made withdrawals, the market moved, and they reallocated the account into riskier investment options. By the time the QDRO went in, there wasn’t enough left to fund the award as written.
Now one side wants to rebuild the marital share as if none of that happened. The other side is asking why anyone would pretend it didn’t. The plan administrator isn’t going to resolve that dispute — they just run their system’s math and wait for an order that tells them what to do.
The language created the fight. The language could have prevented it.
Here’s the question attorneys almost never ask before the agreement is signed: if the plan owner remains in control of the account between signing and transfer, what are they actually allowed to do with it?
If they do nothing and the market moves up — is it fair that the recipient misses that growth? If they actively reallocate into riskier investments and the account drops — is it fair that the recipient shares the loss? What about withdrawals? What about loans against the account? The phrase “gains and losses” doesn’t address any of it. And the plan administrator won’t catch that context. They execute whatever their system runs based on the order you give them.
The problem isn’t the market. It’s the window.
Between the date of settlement and the date the QDRO is actually processed and accepted by the plan, time passes. Sometimes a lot of it. During that window, the account can change significantly — through market movement, through the plan owner’s investment decisions, through withdrawals or loans — and the agreement as written may not address who bears the consequences of any of those changes.
You can’t control the market. But you can control the clarity of the agreement and how quickly the transfer gets completed.
What actually fixes it
The retirement work needs to happen before the agreement is signed, not after. That means:
Identifying the marital share with specificity. Not a vague percentage of whatever the account happens to be worth at transfer, but a clearly defined amount or methodology that both parties understand and the plan can actually implement.
Deciding explicitly how gains and losses will be handled during the gap period. Will the recipient’s share track market movement? Will it be frozen at a specific value? If the plan owner changes investments, what governs the effect on the recipient’s share? These are answerable questions — they just have to be asked.
Writing language the plan can execute. Plan administrators follow the order, not the intent behind it. Vague terms create ambiguity that either generates a rejection or gets resolved in a way neither party anticipated.
A well-drafted agreement also shortens the practical window between signing and transfer, because there’s less back-and-forth between attorneys, plan administrators, and the court. The part you can’t control — what the market does, what the plan owner does — gets smaller when the process moves faster.
The phrase “gains and losses” is a placeholder, not a plan.
It signals intent without creating one. Before any retirement account settlement is finalized, the questions of who controls what, who bears what risk, and how gains and losses are actually calculated need answers — in writing, in language the plan can implement, before anyone signs.
That’s the work. And it’s almost always cheaper than litigating what the agreement was supposed to mean.