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complex divorce & property division Archives

Property division and retirement accounts

California couples who are getting a divorce should be aware of potential tax liabilities in dividing retirement accounts. A qualified retirement plan, including a 401(k), a simplified employee pension plan or a profit-sharing plan, must be divided with a qualified domestic relations order. This is filed with the court and gives the other spouse the right to receive distributions from the account. It also makes the receiving spouse responsible for any income tax on payouts and allows the spouse to roll the payments into an IRA.