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What happens to a 403(b) during a divorce involving high assets

A 403(b) plan, known also as a tax-sheltered annuity plan, is a type of retirement plan for those who are employed by the government or non-profit and educational organizations and are comparable to 401(k) plans. Investment accounts are especially critical during divorces between individuals with high assets due to how much is usually at stake during property division. When a divorce occurs in Florida, a 403(b) plan is considered marital property, and both spouses have certain rights when it comes time to divide the plan.

Splitting a 403(b) plan is not necessarily as straightforward as dividing other assets, such as a house, which could either be sold outright or transferred to the other spouse while negotiating a divorce agreement. For example, a 403(b) needs a qualified domestic relations order, which requires approval from the plan administrator and the divorce court judge. This order includes all the necessary details to initiate the transfer of some or all of the plan's funds from the holder's account.

In most divorce cases, the spouse must bring attention to this account while divorce proceedings are taking place. To help reach a mutual decision more smoothly, it is helpful to recognize that a person's spouse has legal rights to these kinds of assets. Both parties involved might each have their own retirement accounts and may decide to keep their own as part of the settlement. In cases in which one spouse has more money in his or her account than the other, a portion can be transferred to the other spouse.

To ensure that the plan's funds are divided according to the divorce agreement, a Florida resident may want to discuss his or her rights in regards to a 403(b) account with a divorce attorney, plan administrator and financial adviser. Though divorce is often a time-consuming process, as well as an emotional process, if the QDRO is done correctly, it can help make the division of a 403(b) plan a relatively straightforward process. As with any divorce proceeding involving high assets, an experienced divorce attorney can help manage expectations, as well as provide guidance throughout the process. 

Source: newsmax.com, "Divorce and Your 403(b): What Are Your Rights?", Jerry Shaw, May 4, 2015

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