Retirement plans like 401(k)s are plans companies offer to their employees. This means that a 401(k) is not an asset you and your spouse jointly own — it is instead a benefit offered to one person by his or her employer. A common question in divorce cases is whether you can split the payouts of a retirement account if you do not work for the same employer as your spouse. The answer is yes, but only if you meet the requirements of the federal laws pertaining 401(k)s, known as ERISA (the Employee Retirement Income Security Act of 1974) and the Internal Revenue Code. Federal law does not allow an employee’s 401(k) to be assigned to another person, even a spouse. This law ensures the benefits will go to the employee upon his or her retirement. There is, however, an exception for an “alternate payee.” If the proper procedures are followed in compliance with ERISA, the local divorce court may order distributions to the spouse. How this process works After the divorce court determines the 401(k) will be split, the court must approve a special order, called a Qualified Domestic Relations Order (QDRO). This is the tool used to transfer assets from the person who owns the 401(k) to his or her former spouse. This is the only means by which an individual can receive nontaxable payouts through his or her former partner’s 401(k). In most cases, the portion of that 401(k) that goes to the spouse will be transferred to the spouse’s own individual retirement account (IRA) to avoid taxation. A QDRO may also be used to assign part of a 401(k) to a child or a dependent to satisfy child support obligations. Tips for Summer Visitation for Divorced ParentsDuring the summer months, your children likely do not have nearly as much routine in their schedules as they do between the months of September and May. As such, you might find it necessary to adjust your custody and visitation schedules so that you can accommodate your children’s needs and your own work schedule. Below are a few tips for summer visitation for divorced parents:
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