Distributions After a Divorce
This section serves to provide you with information regarding distributions resulting from a divorce settlement. We would be glad to work with you, your former spouse, and legal representatives to make any necessary payouts. Please do not contact Fidelity in the case of a divorce settlement as these matters are handled through the Board of Benefits Services.
Upon learning of an impending divorce, we will freeze the participant’s retirement account(s) from any distributions until the required assets are transferred to the former spouse. Though the freeze is temporary, this is standard procedure to ensure appropriate administration of the court order. The next step is for the participant to complete the Participant Authorization to Share Information form and submit it to the Board of Benefits Services. This form allows BOBS to share needed information for the former spouse and their attorney to complete a Qualified Domestic Relations Order (QDRO) and/or a Domestic Relations Order (DRO). If however, BOBS does not have the Participant Authorization to Share Information and we have received a judicial order, we must comply with the court order and will need to furnish the former spouse and their attorney with the needed information for the QDRO and/or DRO.
The Guide for Obtaining Distribution of Retirement Benefits Incident to Divorce addresses the procedures for receiving a distribution from the 403(b) Plan after a divorce through the use of a QDRO and the procedures for obtaining a distribution from the Retirement Plan after a divorce through the use of a DRO. Some participants may have assets in both plans. If the divorce decree addresses assets from both plans, a QDRO and a DRO will be needed.
Once BOBS receives all of the court-certified documents, the alternate payee needs to make decisions on the retirement plan distribution. Each plan is subject to different rules and taxation.
RCA Retirement Plan
If the alternate payee is eligible for all or a portion of the participant’s RCA Retirement Plan, the alternate payee is only able to receive a full payout of the assigned assets. A full payout means that the alternate payee will receive the full distribution as a taxable transaction with automatic federal and state withholding. The assets cannot be rolled over to an existing IRA or to a qualified retirement plan. The amount of the payout will be reported as “Other Income” in the tax year received on Form 1099-MISC. Click on these links to download the RCA Retirement Plan Alternate Payee Distribution Form and W-4 form. Upon completion, submit the forms to the Board of Benefits Services.
403(b) Retirement Program
If the alternate payee is entitled to all or a portion of the participant’s RCA 403(b) Retirement Program, the alternate payee can choose one of two options:
- A full payout to a non-retirement account is subject to 20% federal tax and state tax withholding will apply.
- A rollover with no tax consequences until the alternate payee begins to take retirement distributions.
Fidelity Investments will report the transaction on form 1099R. Rollovers, while not taxable, are reported on form 1099R.
Click on this link to download the form: RCA 403(b) Alternate Payee Distribution Form. Upon completion, please submit the form to the Board of Benefits Services.
If you move, please contact BOBS, so we can update your address.