As the holidays approach, divorce attorneys will be patiently waiting for the calls they will receive after the holidays. It is known that many couples having difficulties will wait until after the turkey is carved and the presents are unwrapped before they say good-bye!
When splitting assets from an employer retirement plan(401k) to an ex-spouse a QDRO(qualified domestic relations order) will be needed. After the plan receives and approves the document an ex-spouse is usually given the option to rollover funds to their own IRA.
However IRA accounts are divided based upon the divorce agreement, not a QDRO. A copy of this document should be given to the IRA custodian. When the IRA is split, funds will be transferred via a trustee to trustee transfer to an IRA in the name of the ex-spouse.
My recommendation, before you finalize your divorce agreement, speak with your advisor or IRA custodian to make sure the proper instructions and information are written into your agreement. Many custodians want to see specific language regarding the division of assets. This will help save time and money.
Remember to seek professional advice when making important life decisions.