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Combined division formula


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I recently drafted a standard QDRO splitting H's 401(k) plan 50/50 as of the date of the divorce (4/04/16) plus earnings through the date account segregation. H also owes W $24,000 to cover his 1/2 of the family debt and the attorneys want to take it from the 401(k) as he doesn't have the money anywhere else. The divorce judgement has been amended to reflect this. I figure I have 3 revision options:

1) Reflect a percentage greater than 50% that will approximately amount to 50% + $24,000 (i.e. 59/41, etc.)

2) Use #1 to come up with an agreed dollar amount and award a flat dollar amount.

3) Keep the current formula noted above (50/50 plus earnings) plus $24,000. 

I don't see a problem with any of the options, but wonder if a plan administrator will accept #3 even though it seems the most accurate. Any thoughts.

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IMHO, the PA should accept a formula that is clear.  The PA does not care what the parties will do with the money or how they decided to make the split. 

However, your description of the $24K implies something outside the plan.  Is that correct?  If you add $24K (or something similar) to the QDRO, that amount is part of W's segregated account, and will (probably) go to her IRA.  It is not cash that she can spend.  Also, at some time, she will withdraw it from her IRA, at which time it becomes part of her taxable income.  If your original post "...owes W $24,000..." means it should be non-taxable to her, putting anything extra in the QDRO will transfer the tax burden on her.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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