I’m retired and filing for divorce online. I am currently having $1400 per month withdrawn from my 403b account. I pay

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Customer: I’m retired and filing for divorce online. I am currently having $1400 per month withdrawn from my 403b account. I pay 22% tax on that withdrawal. I would like to make that into a monthly alimony payment. Because it would be used as alimony, is there some way to bypass that tax? My wife’s name is ***** ***** the 403b account. I would like to have her removed from it. Is that done commonly?
JA: Is there an agreement regarding alimony? Or a court order?
Customer: not as yet. We’re just beginning the process, but my wife accepts the amount.
JA: What's the monthly support payment in this case?
Customer: $1400, and she is receiving $800 monthly from my social security as a spouse.
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: I think it’s sufficient for now.
Answered by Felicia S Esq. in 2 hours 9 months ago
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Felicia S Esq.
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Felicia S Esq., Expert

Hello and thank you for using Just Answer!

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Felicia S Esq., Expert

Typically, what people in this situation do, is rather than give alimony for her portion of the 403(b) account, you would award her a portion of the account (Depending on the state you're in she is likely entitled to a equitable portion of that if it was accrued during the marriage). You do this via a qualified domestic relations order, which allows the amount to be rolled over into an account for her without tax implications. Then from there she can draw down on her account however she chooses and their may be tax implications for that like normal.

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Felicia S Esq., Expert

Are there any other questions I can answer regarding this issue today?

Customer
Thank you. I hope I’m understanding.
So if I transfer a portion, say 50% of the account to her name, in the account of her choice, for her to use as she pleases, then there will be no taxation on me for withdrawing the money from the 403b, which by the way is in both of our names. Doing so would also relieve me of responsibility of financial support in the future? This is called a qualified domestic relations order?
Would this one-time payment preclude the need to purchase life insurance? Is a qualified domestic relations order recognized in the state of Oregon?
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Felicia S Esq., Expert

So, it really depends. You still have the normal taxes due to whether you choose to withdraw from a 403(b) account or not. But if you were withdrawing from your account only to pay her, then you can divide the account and she can then withdraw as she sees fit.

Spousal maintenance depends on a variety of factors, but the court may find that if you divide that account and receive similar monthly amounts otherwise, that it's not needed.

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Felicia S Esq., Expert

The qualified domestic relations order is tax document also filed in family court that allows you to divide the 403(b) account without tax implications from the division.

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Felicia S Esq., Expert

It's not a one time payment, the administrator of the 403(b) will get the QDRO to see how much she is entitled to, they'll divide the account accordingly, then work with her to determine how she wants to access the money.

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