Fast Answers: Family & College
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Answer: Family & College, Divorce, General
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Can I transfer part of my retirement plan assets to my former spouse without paying taxes and penalties on the withdrawal?
Yes -- if the transfer is part of what’s called a court-ordered disposition of qualified plan assets under a Qualified Domestic Relations Order (QDRO). A QDRO is a court-ordered disposition of marital property specifically addressing the assets in a qualified retirement plan, such as a pension plan or 401(k). The QDRO creates an alternate payee and assigns the alternate payee the right to receive plan benefits payable to the plan participant. The participant’s spouse, former spouse or dependent may be designated as the alternate payee. The QDRO allows the plan administrator to make the distribution. If the retirement assets are in an IRA, the division and distribution must be adjudicated by the court and a distribution order made. Otherwise the distribution may be deemed a withdrawal subject to penalty and taxes.Return to Questions
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