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Chapter 4. No Plan Is an Island > Divorce and Plan Assets

Divorce and Plan Assets

A divorced spouse has certain rights to qualified plan assets, and a court will often issue a qualified domestic relations order (QUADRO) to specify spousal benefits. This is important from a tax perspective to the spouse who is entitled to these benefits. Most people who have just gotten divorced don't want to leave the money commingled with their ex-spouse's. The options are to do an IRA rollover, take a lump-sum distribution, or take periodic payments based on life expectancy for five years or until age 59.5 (if the spouse is under age 59.5), whichever is longer. If the spouse receiving the benefit wishes to take those systematic withdrawals instead of the IRA rollover, arrangements for the payments must be made. Once the IRA is rolled over, this is no longer an option.


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