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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10100
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have a question about s retirement accounts. he has a 401k

Customer Question

I have a question about his retirement accounts. he has a 401k a state retirement plan and a pension. Since I'm entitled to 50% for the 13 years we were married. How is this dispensed? Monthly or in a lump sum? Is that included in monthly alimony if monthly or a separate payment of retirement benefits? I have no idea how the retirement works.
Submitted: 11 months ago.
Category: Tax
Expert:  Lane replied 11 months ago.

Hi,

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In a divorce settlement, if that the situation here, the court will order something called a QDRO for the 401(k) ... and something called transfer pursuant to a divorce for government plans.

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Both of these create an IRA for the spouse who is being awarded retirement plan lump sums, so that the prson who is giving up some of their qualified plan is notn taxed and the person receiving the funds are not taxed either (UNTIL they decide to pull monty from that resulting IRA).

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SOME plans, however do not allow for lump sums (simply because of the way the plan is structured and used. In those instances, the receiving spouse is usually awarded a portion of the monthly pension once it begins, as what's call an alternate payee.

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YOu should have your attorney investigate the plan provisions in what's called the "plan document," which ALL retirement plans have to see whether a lump sum is allowed.

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All 401(k)s do and MANY government pensions allow lump sums as well ... but not all.

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Let me know if I've understood your question and/or of you have further questions on this...

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Lane

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