Dividing Retirement Assets Upon Divorce Retirement plans often constitute a material asset to be divided in a divorce. When the participant spouse's benefits are vested, liquid and available for withdrawal, all or a portion of the benefits can be transferred to the non-participant spouse. Present transfer of equivalent assets method Under this method, the present value of the participant spouse's benefits is computed with the participant spouse retaining those benefits and an equivalent amount of other marital property transferring to the non-participant spouse.
Benefits are then divided.
The QDRO is a judgement, decree, or court order, including an approved property settlement agreement, that is issued under the domestic relations law of a state. A QDRO gives a spouse, former spouse, child, or dependent of a participant in a retirement plan the right to receive as an alternate payee all or part of the benefits that would be payable to the participant under the plan. QDRO's can also be used to enforce an obligation to pay spousal and child support. Individual retirement accounts Transferring a taxpayer's IRA to their spouse or former spouse, under a decree of divorce or separate maintenance or a written instrument incident to divorce, is not considered a taxable transfer. Choosing the correct path for dividing retirement assets can be complicated and tricky.