Splitting up your retirement funds

In most states, retirement plans that you acquired during a marriage, such as 401(k)s, IRAs, pensions, and annuities, have to be included in the division of marital assets in a divorce.

The specific rules differ from plan to plan. Some might allow a distribution of your ex-spouse's portion at the time of divorce, for example, while others require that you wait until the ex retires. So it's essential to collect all the relevant documents and consider seeking help from a lawyer or knowledgeable financial adviser. Some key points to consider:

Find out who has what

Adding up your own retirement assets should be easy, but finding your spouse's might require some digging. You can start with tax returns, which list contributions made to individual retirement accounts. For employer-sponsored accounts, like stock-option plans and 401(k)s, you'll probably have to delve deeper. Bear in mind that you have a legal right to this information.

Consider a QDRO

An attorney can draw up a qualified domestic relations order. It's a document that specifies what to do with each spouse's share of certain retirement accounts, including 401(k)s, pensions, profit-sharing plans, and tax-sheltered annuities.

Weigh the tax ramifications

You might have a house and a retirement fund, both valued at roughly the same amount. When the house is sold, there will probably be little or no tax on the sale, but all the money in the 401(k), unless it's a Roth, will be taxed.