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How can I access my spouse’s retirement plan after a divorce?

During the divorce process, you may request to receive a portion of the value of your spouse’s employer-sponsored retirement plan. As noted by Barron’s, you should recalculate your own retirement plan and then adjust your living budget to reflect your new single-household income. 

Depending on the retirement plan’s particular rules, some individuals may receive a cash payout or a percentage of the fund’s value when the marriage dissolves. If this applies, you will not access a spouse’s retirement plan after your divorce because you may have already received the full portion of the value that belongs to you. 

Qualified domestic relations order 

For you to receive your share of the retirement plan your spouse must request a qualified domestic relations order from his or her employer. Whether your spouse contributed to a pension plan or a 401(k), submitting a QDRO to the divorce court is a requirement under federal law. By filling out the form, the plan’s administrator may pay you some of the funds based on your portion of the plan’s value as ordered by the family court judge. 

Tax liability  

An individual may have the option to roll over the proceeds from a spouse’s plan into his or her own retirement package. If you plan on working after your divorce, contributing funds to your own plan and delaying your retirement may affect whether a tax liability applies to the funds received from your spouse’s plan. Thinking ahead with regard to choosing the best way to manage a large lump-sum payment may help avoid a surprise bill arriving during tax season.