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Don't forget to get a qualified domestic relations order

During your marriage, you more than likely sat with your spouse and made plans regarding what the two of you would do after retirement. You may have talked about going places you always wanted to see, spending time with your children and grandchildren, and otherwise doing whatever you want together. To make that happen, you diligently saved for retirement as a family through employment, but now, those plans have changed due to divorce.

Other than your marital home, retirement accounts are most likely the largest asset in your marital estate. During the divorce proceedings, the two of you will need to decide how much you each will receive if you negotiate your own settlement. Otherwise, the court will decide how much each of you receives. Dividing it will give you each a chance to rebuild your retirement but with a different future in mind.

Make sure you do it right

Just like splitting other assets, you will need to do some paperwork in order to transfer funds out of the retirement plan. Since that retirement plan was funded through an employer, you will need a qualified domestic relations order to avoid the tax penalties that come with early withdrawals from these accounts. A QDRO must include certain information in order to be valid and pass the IRS test, but the IRS is not the only entity that the order needs to satisfy.

You must also satisfy the retirement plan administrator. For this reason, it would be a good idea to talk to the plan administrator before moving forward in case there is specific information you need to include under the rules of the plan. Once you gather all that information, the QDRO will also need to include pertinent information about the person receiving the funds, along with the percentage or amount you will receive or give from the account.

You may need some help

Putting together a QDRO that will meet with the requirements of the retirement plan administrator, the IRS and the court may not be as easy as it sounds. A mistake in the process, and thus the order, could end up costing you or your future former spouse a significant amount of money. To make sure that doesn't happen to you, it would be wise to work with an Oregon divorce attorney with experience in helping people like you prepare QDROs.

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