CDS Financial Considerations in Divorce 2

Question 1

A QDRO (Qualified Domestic Relations Order) is required to divide which type of retirement account without incurring early withdrawal penalties?

Accepted Answer

401(k) or defined benefit pension plan

Answer

QDROs are required to divide ERISA-governed plans like 401(k)s and pensions, allowing tax-penalty-free transfers to an alternate payee.

Question 2

Under the Tax Cuts and Jobs Act of 2017, alimony payments from divorce agreements finalized after December 31, 2018 are:

Accepted Answer

Non-deductible by the payer and non-taxable to the recipient

Answer

Post-2018 divorce agreements eliminated the alimony deduction for payers and the income inclusion for recipients under the TCJA.

Question 3

When a marital home is sold as part of a divorce settlement, the capital gains exclusion for a single filer is:

Accepted Answer

$250,000

Answer

A single filer can exclude up to $250,000 of capital gains on the sale of a primary residence under IRC Section 121.

Question 4

Which method assigns each spouse the retirement benefits they individually earned during the marriage, leaving both parties' accounts intact until retirement?

Accepted Answer

Separate interest approach

Answer

The separate interest approach divides pension benefits so each spouse receives their own share directly from the plan at retirement.

Question 5

A spouse who was a stay-at-home parent discovers the other spouse has a significant stock option plan. When are unvested stock options typically treated as marital property?

Accepted Answer

When they were granted during the marriage, regardless of vesting date

Answer

Options granted during the marriage are generally marital property even if unvested, with allocation often calculated using a time-rule formula.

(CDS) Certified Divorce Specialist Practice Test

(CDS) Certified Divorce Specialist Practice Test

CDS Financial Considerations in Divorce 2