My wife and I mediated our divorce and did not have lawyers. We are now struggling to figure out how to divide our retirement accounts. I have a 401(k) with my company and she has an IRA at Fidelity. They seem to have different rules for division and none of it is clear. Our mediator didn’t give us much guidance on this piece other than to hire someone to do it. We are still trying to keep costs down and don’t want to spend a ton of money hiring someone to do it.
Is there a website or some other place you can direct me to for samples of how to do this so I can try it on my own?
Dividing retirement assets is more complicated than you might suspect. Depending on the type of account, there are different rules and processes. I encourage you not to do it all on your own.
The IRA is pretty straightforward. Your wife needs to sign a letter of instruction directing Fidelity to do a tax-free rollover of the appropriate percentage of her IRA to a Rollover IRA account in your name. If you do not yet have such an account, open one at Fidelity. It is easy enough to do online. Be sure she includes a copy of your judgment of divorce along with the first page, signature page and the relevant page of your divorce agreement referencing the division in the instruction letter. Also include the account number from which the rollover will come and the account number into which the rollover funds will be deposited. Then, you need to send a letter to Fidelity authorizing them to accept this rollover into your newly established Rollover IRA account. Last time I did this, there was no fee for the transfer and you can certainly do this part on your own.
The more difficult piece is the 401(k). There are lawyers who specialize in drafting Qualified Domestic Relations Orders as well as actuaries and Pension Appraisal Services. They charge a wide range of fees and you should really hire one and split the cost. The firm I regularly send my clients to charges a few hundred dollars to take care of it for you. They will do the drafting, make sure the draft is pre-approved by the plan administrator and send it to you for signing and filing with the court. From there, you and your ex will need to file a joint motion to approve the QDRO and after review the court will approve it and send you a certified copy. Once you get the certified copy, you will need to mail the certified QDRO from the court to the plan administrator and request they implement the QDRO. It is well worth your money to hire someone for that piece — given how lengthy the process is, the last thing you want is to do it wrong and waste months having to start over.