How to Cash Out a Pension in a Divorce
Pensions are retirement plans that are paid for by your employer. Your state may include your retirement plan in community property if your state has adopted community property laws. Community property means that assets acquired by you and your spouse are shared. When you divorce, these assets are split up between the two of you. A court may order that you split the assets up equally or by some other percentage. Regardless, you should understand how to cash out a pension during your divorce.
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Instructions
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Get the pension distribution form from your pension administrator. This form designates the amount of money being withdrawn from the pension, as well as where the money will go --- for instance, to a bank account via direct deposit or a check made out directly to you.
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Instruct your spouse to sign the spousal consent form. This form releases the pension plan from any obligation to make pension payments to your spouse after you die. When you take a lump sum or full lifetime pension payments, your spouse must sign this form.
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Obey any qualified domestic relations order issued by a court. A qualified domestic relations order is a court order superseding the normal distribution rules set forth by the Employee Retirement Income Security Act. These rules normally dictate that you can't transfer funds to another retirement account nor assign benefit payments to another person. The qualified domestic relations order provides an exception to this rule and forces your pension administrator to distribute funds to your ex-spouse. Your ex-spouse deposits this money into her own retirement account.
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Submit your pension distribution form to your pension administrator. You should receive your lump-sum pension payment within 30 days.
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Tips & Warnings
If you don't receive your pension payment within 30 days, contact your pension administrator through your employer and verify that all paperwork was processed.
