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What Alaskans should know about 401(k) asset division and divorce

Divorcing couples in Alaska fall under the same community property laws that allow all assets accrued during a marriage to be divided equally during a divorce in most states. In many cases, a 401(k) retirement plan acquired during the marriage meets the criteria for community property and is subject to division during a divorce. The former spouse of the 401(k) plan holder and any eligible dependents are recognized as alternate payees on the account.

In order to proceed with the asset division process, the court will provide a qualified domestic relations order. The QDRO is used to clarify the specific terms of the 401(k) asset division, but it may also be used for other types of retirement accounts. A QDRO must go through a process of verification before it can be shown to the retirement plan administrator and rendered legally effective.

In any high-asset divorce, security may be a concern. The QDRO is an effective way to protect 401(k) assets because it specifically defines who may access the account, how much may be withdrawn, and when the withdrawal takes place. Additionally, those who obtain a properly processed QDRO are not subject to the federally mandated 10 percent early withdrawal tax penalty that applies to all withdrawals prior to a set retirement date.

While there are federal guidelines that apply to asset division, 401(k) asset division is also subject to Alaska state law. Due to the complex nature of 401(k) asset division and QDRO processing, many Alaskans choose to consult a family law attorney for guidance during the process. An attorney may assist with defining the terms of the agreement as well as processing through the court and the retirement plan administrator.

Source: 401k.org, "401(k) and Divorce", January 07, 2015

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