Divorce

We request that you send any supplemental documentation that you have, whether it be a QDRO, marriage settlement agreement, or property settlement agreement. You should not need to create any supplemental documentation for Betterment that was not already created through your divorce process with your attorney, as long as the division of assets is clearly outlined in your divorce decree and your existing supplemental documentation. If the division of assets is not clearly and explicitly defined ...

QDRO stands for Qualified Domestic Relations Order. According to the Department of Labor, a QDRO recognizes a spouse’s, former spouse’s, child’s, or dependent’s right to receive benefits from a participant’s retirement plan. Under ERISA law, a judgement must be issued by a state authority in order to grant the payee’s rights in a domestic relations order.

Once your divorce is finalized, you can begin the process of transferring assets between your ex-spouse, as designated in your divorce decree. In order for us to complete a transfer from one Betterment account to another, we will need: Original Certified Copy of Your Entire Divorce Decree It should clearly identify the legal terms of your divorce, and you should also include all supplemental documentation ordering the transfer of your assets. Supplemental documentation may include a QDRO, ...

The length of time it takes to transfer an account can vary based on the details of each case, including what documentation is shared with us initially and other factors. Generally speaking, the transfer should complete within 2-6 weeks after receiving proper divorce documentation. Please keep in mind that we may need you to make changes in the receiving account, and we may need to request additional information from you throughout the process.

If you wish for Betterment to facilitate the transfer of funds between individual accounts, then your ex-spouse does need to open a Betterment account. Among other things, this allows us to verify their identity, which is a required part of the transfer process. As soon as the funds have been transferred to an account in their name, they may transfer to a different provider if they wish.

If you want to transfer assets from your individual account (whether IRA or taxable) to your ex-spouse’s individual account, we’ll need the finalized divorce paperwork before we can move forward. If you want to divide taxable joint account assets before your divorce is finalized, we can help you transfer these assets from your joint taxable account to your spouse’s individual taxable account as well as your own. We can assist you through our joint-to-personal account transfer process, which ...

IRA: The IRS states that the transfer of an IRA to a current or former spouse—under a decree of divorce, separation agreement, or a written instrument incident to the decree—is not considered a taxable event. A common scenario is that ½ of the IRA is transferred to the ex-spouse’s IRA. This transfer of ½ of the IRA is not a taxable event but withdrawals from the IRA in the future may be taxable, depending on age and account type. Taxable account: The IRS states that typically there is no ...

Marital status is determined by your status on the last day of the year. If you are divorced on December 31st of that year, the IRS considers you to be single for that entire year. If you are legally married on December 31st, the IRS considers you to be married for that entire year. You can only file a joint return if you were legally married on the last day of the year.

If the funds you are transferring due to a divorce are held in your Betterment for Business 401(k) account(s), please email divorce@betterment.com to get the appropriate forms you’ll need. Please note that this process will require a QDRO.