Individuals over the age of 50 may begin thinking about setting up their retirement and living comfortably in Oklahoma. The Sooner State has gained a reputation as particularly friendly to retirees. Some older individuals may also regard the choice of a retirement state as a matter of remaining close to family members. When geographic or other considerations differ between spouses, however, dissolving a marriage may seem like a practical way to accommodate both spouse’s wishes.
While there are many issues to work out before filing for a divorce, dividing a retirement fund may have its own separate procedure and considerations. As noted by Kiplinger magazine, an individual may, for example, avoid a withdrawal tax by rolling the proceeds immediately into an individual retirement plan.
Spouses who did not work during a marriage generally have a legal right to claim a portion of their working spouse’s retirement funds. If a nonworking spouse supported a working spouse’s ability to maintain a full-time career, he or she may request a share of the working spouse’s retirement plan during a divorce.
Nonworking spouse’s contribution
Divorce courts typically view child-rearing and housekeeping as a nonworking spouse’s contributions to the marital household. The working spouse may not have successfully invested income into a retirement plan but instead for the nonworking spouse’s full-time support. For this reason, a nonworking spouse may request a lump-sum payout or a percentage of the funds from a working spouse’s retirement plan.
Requesting a QDRO
Some employer-sponsored retirement plans require a qualified domestic relations order. Under federal law, a pension or 401(k) plan’s administrator must provide a QDRO when an employee requests it. Without a QDRO, a family court judge may not divide a retirement plan; an ex-spouse, however, may request the order later.
New lifestyle and new budget
With a new lifestyle and a lump-sum payment from a retirement plan, budgeting is important for individuals who do not plan on working or starting a new career. The divorce process also allows an individual to request alimony or spousal support. Planning for how much is necessary may help in a smooth lifestyle transition.