Accessing one's retirement account for the purposes of
withdrawing money before reaching the age of 55 years old
can result in specific federal income tax and
penalties. However, pursuant to the Employment
Retirement Income Security Act (ERISA), there is an
exception to this rule when spouses going through a
dissolution of marriage must divide a retirement
account from the name of only one spouse to the name of
each individual divorcing spouse. The named owner of
the account is usually referred to as the "participant" or
"beneficiary", while the spouse whose name does not appear
on the account is referred to as the "alternate payee".
While except under specific circumstances the retirement funds can still not be accessed by either spouse for spending without suffering a tax penalty, the account can be divided and a portion transferred to the alternate payee spouse without tax penalty for the transfer. For example, some 401k plans are exempt from the 10% penalty provided the transfer is occurring incident to a divorce. Thus, two retirement accounts are created where previously there was only one account without penalty to either spouse by way of a Qualified Domestic Relations Order. At TLC, an experienced family law and divorce attorney can assist you in drafting and obtaining your Qualified Domestic Relations Order.
Tsai Law Company, PLLC
2101 4th Avenue Suite 1560
Seattle, WA 98121
1-425-DIVORCE (348-6723)
Email:
support@TLClawco.com
Please visit our home page for additional information about our family law and divorce lawyers and dividing retirement assets.
