Categories: Divorce

How do deferred compensation accounts, 401k, and retirement benefits get divided during a divorce?

The court will split these 50/50 if it was all acquired during the marriage. There is no penalty to divide and the money is not removed from the accounts. After the division, each party is subject to IRS rules for prematurely withdrawing the money. One spouse cannot create a tax liability for the other spouse. The money/account should not be withdrawn during the pending divorce.

A Qualified Domestic Relations Order may be required if you are dividing your deferred compensation, 401k, or retirement benefits. If this is the case, a QDRO expert may be necessary to divide these assets. The QDRO expert will require information concerning the date of your marriage and the date of the plan to value, which is usually the date the QDRO expert actually divides the asset. You will need to contact a QDRO expert for this.

Cindy Best

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