If a divorce is approaching and you have a 401(k) account in your name that is set to be split between you and your spouse in Ohio, you may wonder how the split will be achieved. As the Motley Fool website explains, dividing a 401(k) is achieved with a Qualified Domestic Relations Order (QDRO). Since there are different ways to split a QDRO, the order should specify exactly how that split is to be achieved.
When it comes to splitting up a 401(k) in a divorce, your spouse has a number of options to choose from. You can likely expect your spouse to split your retirement 401(k) in any of the following three ways.
Leave the Money
First, your spouse might elect not to take his or her share of the account at the moment. Instead, your spouse’s share of the account will remain there until the day you decide to retire. At that time, your spouse will simply receive withdrawn payments from the 401(k) just as you would.
Transfer the Money
Alternatively, your spouse may choose to take his or her share from the account and roll it over into another plan. This plan will likely be one in the name of your spouse. Your spouse would likely maintain that account until such time when he or she retires and starts to receive the withdrawals from the account.
Take the Money
Additionally, your spouse will decide just to take his or her share of the 401(k) in a lump payment. With the share of the account in hand, your spouse may elect to do any number of things with the money. Your ex may buy a vehicle, make a down payment on a house, or put the cash away into savings.
Whatever the choice your spouse makes, the QDRO should make clear how your spouse wishes to handle the split so that you can properly administer the 401(k) until the day you retire. A successful splitting of your 401(k) will make sure you keep your share of the account and allow it to mature without incurring taxes and penalties from having to distribute part of the money before your retirement.
Be aware that this article is only written to educate readers on high income splits in divorce cases. It does not provide readers with any legal advice.