Who Gets What? Kiplinger's (03/01) Vol. 55, No. 3 p.104; McGrath, Courtney
Retirement plans are becoming a key battleground in divorce
settlements, says Martin Shenkman, a lawyer and co-author of "Divorce
Rules for Men." For many couples, retirement accounts are the most
valuable asset to be divided. However, divvying up these assets can be
complicated. In addition, if you decide to split a 401(k), you will
have to renegotiate a qualified domestic relations order (QDRO), which
specifies the alternate payee and how large a share he or she will
receive. QDROs can be costly and time consuming, but they are the only
way to ensure that a plan administrator will follow your instructions.
You could trigger major tax consequences if you do not use a QDRO.
Splitting retirement plans also raises the issue of when you will get
the money. If you take a lump sum, you can either roll the funds into
an IRA, or keep the cash if you are willing to pay the taxes on it
immediately. If you transfer part of a former spouse's IRA into an IRA
of your own, you cannot tap the account penalty-free until you reach age