457(b) Accounts in Oregon Divorce Mediation
What to Know About 457(b) Accounts in an Oregon Divorce: The Short Version
A 457(b) pre-tax retirement account for state and local government employees, as well as some tax-exempt organizations. It is similar to a 401(k) or 403(b)in terms of its tax treatment and how it can be handled in a divorce; only the terminology and some technical aspects of the process are slightly different. Your best three options:
- Transfer a portion of it to the non-employee spouse, tax-free, with a Domestic Relations Order (DRO)
- Offset it with other assets for the non-employee spouse, with the employee spouse keeping the 457(b) account in full
- Transfer a portion to the non-employee spouse for an immediate cash-out, with taxes but no penalty
There are other options, but they are undesirable for multiple reasons and are not likely to meet your needs as well as one of the above.
Discovery: What 457(b) documents do you need for divorce mediation in Oregon?
- Most recent account statements
- The Summary Plan Description (SPD)
- Model DRO or QDRO checklists or templates from the Plan Administrator
How will Matthew help you handle your 457(b) in mediation?
As you consider the above options and any others that you may want to entertain, Matthew can offer feedback such as:
- The option(s) that can avoid immediate taxation.
- The option(s) that can avoid a 10% penalty for early withdrawal
- The proper method of transfer to ensure a tax-deferred transfer
- The post-divorce documents and/or procedures, if any, for your preferred option
- Any specific requirements noted based on his review of the Plan rules
- Features that may be available only to the employee spouse but not the other spouse
- The option that can be completed in the shortest time, and the timeline for the others
- Steps to take to preserve broad investment choices for the non-employee's portion of the account, if transferred
- The option(s) that can produce liquidity, and the associated tax ramifications
- Helping you determine which types of assets make the most sense for each spouse, considering various factors
- Valuation issues that may affect one or more of the options
Next Steps
Schedule a 90-minute in-person or Zoom introduction (first hour is always FREE)
or a 30-minute free "meet-and-greet" as soon as you're ready to begin mediation.