Splitting up collectibles such as artwork, china, cars, coins often involves an appraiser coming in and assigning a value to the different items. That value is then used to equitably split up such assets between exes. Splitting up investment accounts, a pension plan or IRA account proceeds can be perhaps even more difficult though, especially if former spouses want to avoid having to pay early withdrawal penalties or exorbitant taxes for doing so.
One of the best approaches for dealing with splitting up a 401(k) plan is to have your attorney draw up a Qualified Domestic Relations Order (QDRO) for your ex and your judge to sign off on.
If your attorney is experienced in drafting QDROs, then he or she will know how to draft it in such a way that minimizes the amount in penalties that you or your ex have to pay for taking an early withdrawal from the 401(k) account. They will be able to guide you in taking actions that will minimize your tax burden as well.
By having a QDRO in place, it allows both you and your ex to outline exactly how you intend to receive your portion of the assets your’re entitled to from your ex’s employer-administered retirement account.
Your ex may be eligible to continue building his or her 401(k) while your perhaps take your portion and roll it over some other type of investment instrument. Alternatively, you may elect to continue letting your portion of the funds earn interest, only taking a payments once your ex retires.
Provided that the 401(k)’s administrator gives permission for you to do so, you may be allowed to take a lump-sum payout as well.
When it comes to retirement or investment accounts, the penalties associated with removing monies from them can be significant if they’re not strategically planned. Being guided through the divorce process by a Kissimmee property division attorney experienced in working with high-asset clients is most appropriate for a situation in which you’re seeking the best results.