401(k) and Divorce
You’ve been saving for quite some time now in your 401(k), and have a sizable amount. But what happens if you get divorced, and how does that affect your 401(k)? In a divorce, your former spouse may be entitled to your 401(k), or a portion of it, depending on the courts. If this does happen, the courts will issue something know as a qualified domestic relations order, or QDRO. A QDRO is a court judgment distributing the assets from your 401(k). The money removed from a QDRO is not subject to the early withdraw penalty from the IRS, even if you are under 59 ½. It is important to make sure the QDRO is correctly created and verified, especially if you are taking the money out before the age of 59 ½.