Melinda L. Singer, Esquire
Hackensack Family Lawyer
Call Today for a Free Consultation 201-870-0826
Menu / Navigate

Let the QDRO help you split a 401K

If you are considering a divorce in New Jersey and either you or your spouse have savings in an employer-sponsored retirement account like a 401K, you will want to learn about the qualified domestic relations order. Beware of proceeding down the path of simply relying on your court-issued divorce decree when splitting these assets as part of your property division settlement. Doing so is likely to leave you paying out large sums of money in the way of taxes and early withdrawal penalties. A QDRO can help you avoid both of these things. 

The United States Department of Labor explains that because a 401K is intended to force long-term retirement savings, any early and non-retirement withdrawals will be subject to penalties and fees. These can eat up a lot of your savings. In addition, such withdrawals are subject to income tax. With a QDRO, your former spouse can be named as an authorized payee on your account so that if they are to receive some of the money in the account, that money can be paid directly to them. From a tax perspective, you have no liability as you have not received any money. If your spouse puts the money into another account, they may also avoid taxation.

The early withdrawal fees are also avoided as the QDRO outlines the terms of the payment. Your plan administrator is also involved in the approval of the transaction.

If you would like to learn more about what you need to consider when determining your property division settlement in a divorce, please feel free to visit the qualified domestic relations order page of our New Jersey family law website.

No Comments

Leave a comment
Comment Information

Contact

Melinda L. Singer, Esquire
3 University Plaza
Suite 207
Hackensack, New Jersey 07601

Phone: 201-870-0826
Fax: 201-678-9595
Map & Directions

Contact The Firm

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

201Magazine2013.jpg

NJSBA.png

BCBA.png

NJAJ.png

10Best2016-2017-2YearsClientSatisfaction-AmericanInstituteOfFamilyLawAttorneys.jpg
Back to Top