Martin V. Higgins

Obviously, the question begs to know more about your situation but I'll give you some general rules to follow. First, calculate what your fixed, required expenses will be in retirement, such as property taxes, utilities and food, etc. Then subtract any pension, social security or otherwise fixed income that you will be receiving. That will give you an idea of what your shortage is and what your savings will have to make up not withstanding your need for discretionary expenses such as vacations, dining out or holiday gifts. Those two areas will need to be supported by your savings. If that does not seem plausible, then I would recommend visiting with a financial advisor that specializes in retirement income planning. You can learn the questions to ask by downloading a Free Consumer Guide at http://www.familywealthadvisory.com/16questions/

Kim, Be aware that this is an area that not every advisor is competent, so please choose one carefully. Below are some guidelines.

How to transfer assets To transfer assets out of a qualified retirement plan because of a divorce, the plan’s administrator must receive a certified copy of the QDRO. Without a QDRO the assets won’t be moved.

QDRO requirements If your plan (or your ex’s plan) requires a QDRO and you’ve both agreed that retirement assets will be divided, there are several things all QDROs require: • The identification of the parties. The party owning the assets is called the “participant.” The party receiving the assets (or the party not contributing to the account) is called the “alternate payee.” • The last known names and addresses of both the participant and the alternate payee. • The name of the retirement plan from which the assets will be paid. A separate QDRO is required for every retirement plan involved. • The dollar amount or percentage of assets to be paid. • The number of payments to be made. Assets in a defined contribution plan, such as a 401(k), are usually paid out in a lump sum. However, a defined benefit plan can set up a series of periodic payments to the alternate payee. • The reason for the QDRO. The assets can be transferred for marital property division, child support, or alimony payments. • Some indication that the QDRO is established under the state’s domestic relations law and Section 414 of the Internal Revenue Code.

Regards, Marty

Don't qualify for a Roth? Use the 'back door'!

Those who earn too much to contribute to a Roth IRA can get the same benefits by opening a traditional IRA and converting it. Should you? If your income is too high, you can’t contribute directly to a Roth individual retirement account, but you can get one in a back-door way.
Step 1: Open a traditional IRA (in your case, it’s nondeductible). Step 2: Convert it to a Roth IRA.
Is it worth it? "It’s a no-brainer if you have the cash to do it," says Kevin Huston, an enrolled agent in Asheville, N.C. , who has clients young and old doing it to shore up their retirement savings. "It especially makes sense for people who are younger, because they have all these years of tax-free growth." Basically, you get an extra $5,000 (or $6,000 if you’re 50 or older) each year that grows in the Roth IRA income-tax free. That’s $10,000 (or $12,000) a year for a married couple. Repeat each year, and you can amass a nice retirement kitty. The audience for back-door Roth’s is a niche: those earning too much to contribute to Roth’s directly but not so much that the extra tax savings doesn’t seem worth the effort. Vanguard says that "backdoor Roth" contributions represented about 2% of traditional IRA contributions in 2011. Income restrictions on conversions were lifted starting Jan. 1, 2010, so anyone -- regardless of income -- can convert a traditional IRA to a Roth. Why go through the hoops of getting money into a Roth IRA? They are an amazing deal, especially for folks looking long-term and expecting higher tax rates in the future. With a Roth IRA, you don’t ever have to take money out, and when you do start taking money out, it’s all tax-free income, including the earnings.
By contrast, with a traditional IRA, earnings grow tax-deferred, you have to start taking required mandatory distributions the year after you turn 70.5, and distributions count as income. A Roth can help keep your tax bite down in retirement. (Ideally you want a mix of taxable, tax-deferred and tax-free accounts to draw from in retirement.) A Roth IRA also has other benefits. Medicare premiums are based on income, so by keeping your income down, you’ll pay a lower premium. If you leave a Roth account to a child, he or she will have to take money out each year, but there will be no income tax hit. (Inheriting a $100,000 Roth IRA is a whole lot better than inheriting a $100,000 traditional IRA; the higher your beneficiary’s tax bracket, the bigger the savings). Here’s how the strategy can help a real couple in their 40s build their nest egg. The wife’s in marketing with a pharmaceutical company, and the husband is a stay-at-home dad. She’s maxing out on her company pre-tax 401k plan contributions -- putting away the full $17,000 for 2012. Her employer doesn’t offer a Roth 401k option. The couple told Huston, their tax adviser, they want to save more, but they can’t contribute to Roth IRAs directly because her income is nearly $200,000 a year. (Once your modified adjusted gross income is $183,000 for a couple filing jointly or $125,000 for singles, no Roth IRA contributions are allowed.) But they can each contribute to a traditional IRA. They don’t get a deduction because of the wife’s high income, so it’s called a nondeductible IRA. She puts away $5,000, and he puts away $5,000. (His IRA is based on her earnings and called a nondeductible spousal IRA; otherwise you have to have earned income to contribute to an IRA.) Then they convert the IRAs into Roth IRAs.
That sounds complicated, but it’s almost as easy as transferring money from checking to savings. You pay income tax the next April only on any earnings accrued between the time you contributed to the nondeductible IRA and converted to a Roth.

So how do you remove the pretax IRA from the equation? Transfer it to a 401(k). Many employer plans allow “roll-ins” of IRA money to 401(k)s. How does this work? Only pre-tax dollars can be transferred to a 401(k), explains Barry Picker, a CPA and IRA expert in Brooklyn, N.Y. Once you move the pre-tax dollars (and earnings) into a 401(k) that leaves an IRA with no taxable income. “Convert it to a Roth; pay no tax,” Picker says. If your employer 401(k) plan doesn’t allow roll-ins, there’s another option for those with self-employment income: setting up a solo 401(k), and doing the pre-tax IRA roll-in to that plan. If you’re setting up a solo 401(k), make sure the provider accepts roll-ins. Do the transfer, then the conversion. This can even work if you have a small amount of self-employment income, say a side consulting gig you report on Schedule C, even for just one year. There’s still time to make an IRA contribution for calendar year 2011 through April 17, 2012. You can double up and make your 2012 contribution, too.