401(k) and Divorce

annuity educationYou’ve been saving for quite some time now in your 401(k), and have a sizable amount.  But what happens if you get divorced, and how does that affect your 401(k)?  In a divorce, your former spouse may be entitled to your 401(k), or a portion of it, depending on the courts.  If this does happen, the courts will issue something know as a qualified domestic relations order, or QDRO.  A QDRO is a court judgment distributing the assets from your 401(k).  The money removed from a QDRO is not subject to the early withdraw penalty from the IRS, even if you are under  59 ½.   It is important to make sure the QDRO is correctly created and verified, especially if you are taking the money out before the age of 59 ½. 

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