I am divorced but we are still working out the final retirement details. I am a Federal employee with a retirement savings plan (TSP) that is pretty much identical to a 401 (k). We have to come up with a date that the money saved would have been divided. Say that we divide 50/50 the money that was in the account as of the day of divorce…for arguments sake exactly 12 months ago. What happens to the interest on her 50 % that has accrued over the past 12 months? Does she get it? Does it remain in the account because it wasn’t there on the date that the money was actually divided? Help please?
I will give this a shot. The lawyer will draft a document called a Qualified Domestic Relations Order that addresses these exact questions. The QDRO will be submitted to the plan (the TSP folks) and they will certify it as being something they can execute. In most cases your wife would get interest on the amount that she is entitled to.
For example, if you had $100,000 dollars in your TSP as of the date you decide upon she gets $50,000. The plan will then calculate how much 50k would have grown between that date and the present. This amount is then transferred into her account and you are done. The split is done this way so that she does not get any piece of contributions you made after the assigned date.
Hope that helps.
That’s pretty much it. We have a lawyer drawing up the QDRO. Since we are amicable, we are trying to minimize the amount of work the lawyer will have to do. We will have one attorney draw up the agreement and another one to review it.
I know that her 50% is accruing interest even as we speak (or maybe not depending on the A&P 500 performance). I wasn’t sure who would get that interest when all was said and done. Since it was earned on her money, as I understand you, it is hers. My 50% plus all contributions after the specified date as well as associated interest is mine.
Thank you for your quick reply!