401k in Divorce
Retirement plans like 401(k)s are plans companies offer to their employees. This means that a 401(k) is not an asset you and your spouse jointly own — it is instead a benefit offered to one person by his or her employer.
A common question in divorce cases is whether you can split the payouts of a retirement account if you do not work for the same employer as your spouse. The answer is yes, but only if you meet the requirements of the federal laws pertaining 401(k)s, known as ERISA (the Employee Retirement Income Security Act of 1974) and the Internal Revenue Code.
Federal law does not allow an employee’s 401(k) to be assigned to another person, even a spouse. This law ensures the benefits will go to the employee upon his or her retirement.
There is, however, an exception for an “alternate payee.” If the proper procedures are followed in compliance with ERISA, the local divorce court may order distributions to the spouse.
How this process works
After the divorce court determines the 401(k) will be split, the court must approve a special order, called a Qualified Domestic Relations Order (QDRO). This is the tool used to transfer assets from the person who owns the 401(k) to his or her former spouse. This is the only means by which an individual can receive nontaxable payouts through his or her former partner’s 401(k).
In most cases, the portion of that 401(k) that goes to the spouse will be transferred to the spouse’s own individual retirement account (IRA) to avoid taxation. A QDRO may also be used to assign part of a 401(k) to a child or a dependent to satisfy child support obligations.
Tips for Summer Visitation for Divorced Parents
During the summer months, your children likely do not have nearly as much routine in their schedules as they do between the months of September and May. As such, you might find it necessary to adjust your custody and visitation schedules so that you can accommodate your children’s needs and your own work schedule.
Below are a few tips for summer visitation for divorced parents:
- Prepare yourself for longer visitations: If you are the custodial parent, prepare yourself for your child to have longer visitation times with the other parent. This is a normal arrangement for divorced parents — your child might go on a vacation with your former partner, for example. Make sure you know where your child will be and how to contact him or her. Get an itinerary for the vacation and be sure the other parent knows your child’s capabilities for activities such as hiking, swimming and biking.
- Keep in touch: When your child does go away for longer visitations during the summer, stay in touch. If he or she has a cell phone, you can call a few times per week to check in and make sure everything is going well. Unless you feel your child is in danger, don’t try to stay constantly connected to your child. Doing so could cause unnecessary conflict with your child and/or the other parent.
- Prepare your child: Depending on your child’s age and how long you have been divorced, he or she might not have spent more than a couple days away from you before. For these longer summer visitations, be sure your child understands he or she will be with their other parent, and that you two will be together again soon. Do not say anything about the separation being difficult for you — focus instead on preparing your child to have fun.
Free Consultation with a Utah Divorce Attorney
If you have a question about divorce law or if you need to start or defend against a divorce case in Utah call Ascent Law at (801) 676-5506. We will help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506