Guest gman26 Posted April 29, 2004 Posted April 29, 2004 If I get divorced will I have to liquidate my 401K and split with my ex? Can she force me to do this? If so, what are the penalties? The 401K is provided through Wells Fargo.
JanetM Posted April 29, 2004 Posted April 29, 2004 No one can force you to liquidate, but a qualified domestic relations order (QDRO) can award an ex-spouse a part or all of your account. This is usually decided during property settlement. JanetM CPA, MBA
Guest gman26 Posted April 29, 2004 Posted April 29, 2004 The only way to liquidate an account is when employment is terminated, correct? If I was to do this what would the tax penalty be, 20%? Are there additional fees? Would an existing loan need to be paid off or would it drop out? Current 401K balance $40,000.00 Current loan balance $27,886.23, loan pmts 669.00/mo.
Guest mkimball Posted April 29, 2004 Posted April 29, 2004 A QDRO is the exception to the no distribution until termination of employment rule. In your property settlement negotiations, you will address the disposition of the 401(k) account, then whatever you two agree on, a QDRO would need to be drafted to reflect your negotiations. I always tried to get clients to negotiate away other assets to leave the pension account intact, whenever possible. Sometimes you can't. The worst result for you would be that your spouse gets it all, including a fully amortized loan, for which you have to go out and get another loan to fund it. Ugly result. Your state may recognize the coverture fraction, in which case only the part of your account accumulated during the divorce is divisble as a marital asset.
david rigby Posted April 30, 2004 Posted April 30, 2004 DOL publications on QDRO's. http://www.dol.gov/ebsa/publications/qdros.html I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
mbozek Posted April 30, 2004 Posted April 30, 2004 How much of your assets will be transferred to an ex spouse will depend on state law and the property settlement agreement approved by the judge. Most states include retirement benefits as part of the marital estate subject to division in divorce. A court could award your ex other property instead of you interest in your retirement plan, e.g., your IRA or a greater interest in your personal residence. You need to consult with divorce counsel in the state you reside for specific advice. mjb
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