If you don’t want to pay all those taxes up front (and who would?) you can choose to have the money sent directly to your IRA. You will have to pay tax on the money you receive, but there won’t be any 10% penalty if the money comes from a retirement plan other than an IRA. If you need money to live on now, you can elect to have the funds transferred from your husband’s plan directly to you, rather than transferring them to your IRA. Ordinarily, you can’t take money from your IRA without penalty until you are 59-1/2. Generally, a Qualified Domestic Relations Order (QDRO, pronounced “quadro”) would be used to transfer your portion of your husband’s plan to an IRA in your name. What’s the best way to handle this retirement plan distribution? I’ll need some of the money to live on, but I’m only 53, so I’m too young to receive retirement benefits. Advertising and Sponsorship OpportunitiesĪs a part of my divorce settlement, I am supposed to get a portion of my husband’s retirement plans.Individual Memberships, Donations and Sponsorships.Warranties as to the current status or accuracy of these descriptions. provides this information merely as a courtesy and makes no makes no representations as to accuracy of these The terms of a specific plan may have changed since the most recentlyĪvailable tax filing, and as a result, these descriptions and features may not beĬurrent. The information provided on this page is based upon the most recent Plan tax filingsĪvailable. Specific terms and options for the specific Plan in question. Review the applicable Summary Plan Description for a detailed description of the The Plan features and descriptions presented are provided only as examples andĭescriptions a particular type of plan. For this purpose, a “cash balance” formula is a benefit formula in a defined benefit plan by whatever name (for example, personal account plan, pension equity plan, life cycle plan, cash account plan, etc.) that rather than, or in addition to, expressing the accrued benefit as a life annuity commencing at normal retirement age, defines benefits for each employee in terms more common to a defined contribution plan such as a “single sum distribution amount” (for example, 10 percent of final average pay times years of service, or the amount of the employee’s hypothetical account balance). This Plan is in the nature of a “Cash Balance” or similar plan, meaning that the Plan has a “cash balance” formula for determining benefits.Benefits accrued under this Plan are primarily pay related.Features of the NON-CONTRIBUTORY RETIREMENT PROGRAM FOR CERTAIN EMPLOYEES OF BLUECROSS BLUESHIELD OF TENNESSEE may include: This includes beneficiary designations and "surviving spouse" benefits. Additionally, the retirement of the Participant prior to the entry of a QDRO will typically limit the Alternate Payee to receiving only a portion of the Participant’s benefits based upon the election made at the Participant’s benefit commencement. When dividing a defined benefit plan, it is critical to know the types of benefits available under the terms of the applicable plan. Rather, the Alternate Payee’s award is typically made in terms of a monthly benefit payable for either the lifetime of the Participant (a "shared payment") or the lifetime of the Alternate Payee (a "separate interest"). With this type of plan, the Alternate Payee is usually not awarded a lump sum cash payment from the plan. The type of benefits available may vary significantly from plan to plan. It is rare, but some plans may allow for a lump sum payment of benefits instead of a monthly payment. Benefits accumulated under defined benefit plans are often referred to as "accrued benefits". Benefits are generally payable to a participant upon reaching "normal retirement age" for the remainder of the Participant's lifetime. Benefits paid at the time of retirement are calculated using a formula based upon years of "credited service" and the Participant’s compensation information. A defined benefit plan is traditionally referred to as a "pension plan." This type of plan typically provides participants with a monthly retirement benefit upon reaching a specific age for either a specific period of time, or for the Participant’s lifetime, depending upon the form of benefits offered by the plan and selected by the Participant. NON-CONTRIBUTORY RETIREMENT PROGRAM FOR CERTAIN EMPLOYEES OF BLUECROSS BLUESHIELD OF TENNESSEE is a DEFINED BENEFIT PLAN.
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