Q: I was awarded half of my ex-husband 401retirement.Now how to go about it and have no funds to pay him or her.
Until I have received the money.
Divorce was finalized on January 18th 2023
Left in December 2021
A:
An award of retirement funds in a divorce is contained in what is known as a QDRO (“Qualified Domestic Relations Order”).
Because retirement funds are not available until the employee’s retirement, the QDRO details exactly how the portion of the funds allocated to the employee’s former spouse is accounted for.
In very rare circumstances, a retirement account may allow an early distribution from a retirement fund like a 401k. If a former spouse has such an option and chooses to exercise it, there are serious tax costs. This is usually only advisable as a last ditch financial Hail Mary to pay for serious medical expenses or to save a valuable appreciating asset like a home.
Before calling an attorney, take your QDRO, summary plan description, and account statement to your CPA for a clear and detailed explanation of what the tax consequences will be.
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