Yes, by using a Qualified Domestic Relations Order (QDRO). A QDRO is a court order meeting specific requirements of the IRS.
An approved QDRO allows a retirement account to be divided pursuant to a divorce or legal separation without penalties and without either party having to claim the money as income until it is actually withdrawn. If the receiving party decides to cash out his or her portion rather than roll it into a retirement account, such as an IRA, then the receiving party will have to pay income tax and may have to pay a penalty on the withdrawal, unless another exception applies.
Nicole M. Bolan, Attorney at Law
Blado Kiger Bolan, Tacoma, Wash.
