Pensions


#1

During separation of property are pensions usually given to a significant other when the pension is payable or is the value separated and “paid out” right away during the divorce process?


#2

This really depends on the factors involved in each case. For qualified employer plans like pensions, you can use a Qualified Domestic Relations Order (QDRO) to withdraw funds early without taking a tax hit. Essentially this is a vehicle that allows for one spouse to transfer funds from a retirement account to another spouse, incident to divorce, without taking a penalty for early withdrawal. The receiving spouse has to deposit the funds into a retirement account in order to avoid a penalty as well. To learn more about the process consult our article on dividing retirement accounts.