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Dogmom

457/divorce

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Vince:

 

A QDRO, if necessary in the instant case, will not include the cash out of the 457(b) account because the IRS has stipulated that a Divorce/Separation does not qualify as a circumstance/situation allowing for the cash out of a 457(b) account. The Regs that you and Intruder refer to simply speak to the continued tax qualification of the Plan notwithstanding the fact that a distribution, that satisfies IRS guidelines, was made pursuant to a QDRO.

 

Joel

 

 

Joel:

 

Please provide a cititation where the IRS has stated that a distribution cannot be made from a 457b plan under a QDRO.

 

The final regs cited above expessly provide that the order can provide for payment under the QDRO in advance of general rules for eligible distributions under Reg. 1.457-6.

 

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Guest Sierra

 

Vince:

 

A QDRO, if necessary in the instant case, will not include the cash out of the 457(b) account because the IRS has stipulated that a Divorce/Separation does not qualify as a circumstance/situation allowing for the cash out of a 457(b) account. The Regs that you and Intruder refer to simply speak to the continued tax qualification of the Plan notwithstanding the fact that a distribution, that satisfies IRS guidelines, was made pursuant to a QDRO.

 

Joel

 

 

Joel:

 

Please provide a cititation where the IRS has stated that a distribution cannot be made from a 457b plan under a QDRO.

 

The final regs cited above expessly provide that the order can provide for payment under the QDRO in advance of general rules for eligible distributions under Reg. 1.457-6.

 

 

Check out the Miami-Dade County Deferred Compensation Plan Emergency Withdrawal Packet.

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Just an fyi:

 

I'm sure you know that accepting a QDRO is also dependent upon the provisions of the 457(b) plan document itself. Meaning, a 457(b) plan document is technically not required to allow QDROs to apply to the plan, but the sponsor can adopt a QDRO policy, if they want, without jeopardizing the status of the plan. Thus, an employer can adopt QDRO provisions to facilitate a property settlement between a participant and his/her spouse or ex-spouse.

 

If an employer's plan has QDRO provisions, the plan administrator should adopt an appropriate QDRO policy to administer QDROs. The plan document may include a section that authorizes the distribution to an alternate payee prior to the participant’s earliest retirement age under the plan. Such a provision would provide the flexibility necessary to comply with the timing of distribution specified under the order without jeopardizing the plan’s eligible 457 status.

 

FWIW.

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Great tangent.. back to the original topic:

 

Dogmom, since they are saying you will only receive $7,500 out of the original account balance of ~29k.. can you see if they will provide you with an accounting or itemization of expenses? You want to see exactly what's been taken out, and why.

 

 

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Guest Sierra

Great tangent.. back to the original topic:

 

Dogmom, since they are saying you will only receive $7,500 out of the original account balance of ~29k.. can you see if they will provide you with an accounting or itemization of expenses? You want to see exactly what's been taken out, and why.

 

THE largest chunk will be INCOME TAX.

 

Joel

 

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Dogmom, Is there a way you can find out from the administrator what the cash-out might be? It could be possible your husband is just telling you that so that you both agree he should keep it and you get something else worth $7500 in exchange. Also find out if you can just re-title the account to yourself and when you would be eligible for the full amount.

 

They probably won't give you information about the account if you aren't the account owner, but there may be ways to find out....

 

We are generally trusting on this board, but something sounds fishy here.

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Hello,

I have a question if anyone can help me. My husband has filed for a divorce and in the papers I was given he is offering me his 457. The account is (as of 2-1-08) worth a little over 29,000.00. My husband told me I would only get about 7500.00 due to the 'hit' he will have to take for taking the money out. Does that sound correct? It seems a little much for a penalty to me. Thanks in advance!

 

 

 

To skip all the crazy talk would be nice ... So I will throw out some ideas and let everyone go at it ...

 

1) If the plan administrator says you can take it out ... You can take it out !!

 

2) To go from 29,000 to 7500 ... Totally absurd. INCOMETAX is not that high ... Even if you are in a high tax bracket you should still be within the 16-18,000 range. So, I would definently agree that you should find out how you will end up with 7500

 

3) Are you planning on just pulling this money out ?? Are you going to use it for something ?? Have you considered rolling it to a tax sheltered investment and defferring those taxes ?? Have you wondered why your husband is giving youa retirement account ?? I'm sure he doesn't want to pay taxes on it !! Look into avoiding the taxes and paying later when you retire !!

 

Good Luck !!

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Dogmom, Is there a way you can find out from the administrator what the cash-out might be? It could be possible your husband is just telling you that so that you both agree he should keep it and you get something else worth $7500 in exchange. Also find out if you can just re-title the account to yourself and when you would be eligible for the full amount.

 

They probably won't give you information about the account if you aren't the account owner, but there may be ways to find out....

 

We are generally trusting on this board, but something sounds fishy here.

 

 

celia:

 

All states require that in a divorce action spouses must exchange financial information with each other. If her husband refuses to turn over the financial information on the 457 plan to her lawyer, the court can order him to provide it. She just needs to be patient.

 

Changing the title to a 457 account depends on state law and the plan provisions. Usually it is better to rollover the ex spouse's interest by a QDRO to an IRA since the there will be no taxation to the employee upon withdrawal and the transfer will not be taxed to the ex spouse.

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