Dividing the Arc Employees Savings Plan in Divorce
Splitting retirement assets during a divorce can be one of the most complicated—and emotionally charged—parts of the process. If you or your spouse has a 401(k) through a plan like the Arc Employees Savings Plan sponsored by Airlines reporting corporation, then a specialized court order called a QDRO is usually required to divide it legally.
In this guide, we’ll walk through what makes dividing a 401(k) like the Arc Employees Savings Plan different, explain the QDRO process, and highlight issues specific to employer contributions, vesting, loans, and Roth accounts.
Plan-Specific Details for the Arc Employees Savings Plan
If you’re dealing with the Arc Employees Savings Plan in your divorce, it’s important to understand the basic plan parameters. Here’s what we know:
- Plan Name: Arc Employees Savings Plan
- Sponsor Name: Airlines reporting corporation
- Sponsor Address: 3000 Wilson Blvd Ste 300
- Industry: General Business
- Organization Type: Business Entity
- Status: Active
- Plan Type: 401(k)
- Effective Date: Unknown
- Plan Year: Unknown to Unknown
- Number of Participants: Unknown
- Plan Number & EIN: Required for QDRO processing, must be obtained directly from the sponsor or plan administrator
Although some details are missing, this is not unusual for private business-sponsored 401(k) plans. We frequently assist clients in retrieving the necessary information from plan documents or directly from the plan administrator.
Why a QDRO Is Required
A Qualified Domestic Relations Order (QDRO) is necessary to divide 401(k) assets in divorce without triggering early withdrawal penalties or taxes. It legally instructs the Arc Employees Savings Plan administrator on how to allocate a portion of the participant’s retirement account to the non-employee spouse, often referred to as the “alternate payee.”
Without a QDRO
If you try to divide the retirement funds from the Arc Employees Savings Plan without a QDRO, the transfer may be treated as a distribution, resulting in significant penalties and tax consequences. A properly executed QDRO avoids these issues.
Key 401(k) Issues in QDRO Drafting
Employee and Employer Contributions
The Arc Employees Savings Plan likely includes both employee salary deferrals and employer matching or discretionary contributions. Only the vested portion of employer contributions will be available for division. The QDRO should clarify whether the allocation applies to:
- Just employee contributions
- Employer contributions (if vested)
- Total account balance (specify date or percentage)
Vesting Schedules and Forfeitures
Employer contributions usually vest over time. If your spouse is not fully vested at the time of divorce, a portion of the account may not be available for division. The QDRO should account for this clearly or specify whether vesting will be evaluated at the QDRO date or at the time of payout.
Loan Balances
Many participants borrow from their 401(k) accounts. In the Arc Employees Savings Plan, outstanding loan balances must be handled carefully. Some options include:
- Exclude the loan and divide only the net balance
- Treat the loan as part of the participant’s share
- Determine an equitable method that accounts for the marital portion of loan use
Improper handling of loans in a QDRO is a frequent mistake. Be sure you address this clearly in the QDRO language. Learn more about the risks at Common QDRO Mistakes.
Roth vs. Traditional Accounts
If the Arc Employees Savings Plan allows Roth 401(k) contributions, your QDRO must indicate how Roth and traditional funds should be split. Roth 401(k) accounts have different tax implications and separating them from pre-tax 401(k) balances is critical.
The QDRO should explicitly direct the plan to segregate these different account types and not commingle them in the transfer.
Filing a QDRO for the Arc Employees Savings Plan
Step-by-Step QDRO Process
- Gather Plan Info: Obtain the Plan Number, EIN, and Summary Plan Description (SPD) from the sponsor or directly from Airlines reporting corporation HR or benefits office.
- Draft the QDRO: Carefully outline the division specifics, account types, and any conditions like vesting or loans.
- Submit for Preapproval (if allowed): Some plan administrators will review drafts before you go to court to eliminate issues. Ask if the Arc Employees Savings Plan allows this.
- File with the Court: Once approved (or finalized if no preapproval), file the QDRO with the divorce court.
- Submit to Plan Administrator: Send a certified copy of the signed QDRO to the administrator and follow up until it’s implemented.
Still stuck? Learn how long QDROs can take and what factors affect processing at this article.
PeacockQDROs—Your QDRO Solution From Start to Finish
At PeacockQDROs, we’ve completed thousands of QDROs from start to finish. That means we don’t just draft the order and leave you to figure out the rest. We handle the drafting, preapproval (if applicable), court filing, submission, and follow-up with the plan administrator. That’s what sets us apart from firms that only prepare the document and hand it off to you.
We maintain near-perfect reviews and pride ourselves on a track record of doing things the right way. Whether you’re dividing the Arc Employees Savings Plan or another type of retirement account, we’re here to help.
Want to understand more? Start with our QDRO resources, or talk to someone about your situation directly through our contact page.
Plan Checklist for a QDRO on the Arc Employees Savings Plan
- Obtain Plan Number and EIN directly from Airlines reporting corporation or plan administrator
- Confirm whether the plan distinguishes Roth and Traditional funds in participant accounts
- Check if preapproval reviews are accepted by the administrator
- Ask for a copy of the Summary Plan Description (SPD)
- Verify participant’s vesting schedule and any unvested contributions
- Identify and disclose any 401(k) loan balances
- Specify division method: Flat dollar, percentage, or marital coverture
- Tag Roth and Traditional balances separately in the QDRO language
Final Thoughts
Dividing a 401(k) like the Arc Employees Savings Plan isn’t something to wing. Between vesting schedules, Roth vs. Traditional buckets, loans, and missing plan documents, there’s plenty of room for error. That’s why using experienced pros like PeacockQDROs is critical.
If your divorce was in California, New York, New Jersey, Connecticut, Kansas, Missouri, Iowa, or North Dakota, and you have questions about qualified domestic relations orders or dividing retirement assets like the Arc Employees Savings Plan, contact PeacockQDROs. We specialize in QDROs and have successfully processed thousands of orders from start to finish.
Get the answers you need—explore our QDRO resources or reach out for personalized help if you’re in one of our service states.