A good number of Georgia residents have 401(k) accounts offered through their employers. This valuable retirement account may be considered a significant marital asset if one ends up getting a divorce. How does accessing 401(k) assets for divorce purposes work?
Splitting up a 401(k) as part of a divorce settlement is not as easy as requesting an early withdrawal of funds. No, that would likely result in a ridiculous amount owed in fees, penalties and even taxes. In order to access 401(k) assets without the early withdrawal penalties, it is necessary to file a qualified domestic relations order, and that order must receive approval before any funds will be released.
If funds are rolled into a retirement account setup for the receiving party, no taxes will need to be paid on the income — yet. If, however, the receiving party just decides to take the funds for personal use now, he or she will likely have to pay income taxes on the amount received. So, taking the right steps to access money is just as important as figuring out what to do with it once it is received.
There is a lot about the divorce process that is difficult and confusing. Figuring out how to handle asset division, particularly in regard to retirement accounts, is just one area in which Georgia residents may find they need assistance. An experienced family law attorney can help those who are going through the divorce process fight for a fair division of assets and make sure that assets are divided the right way as to avoid any potential penalties.
Source: cnbc.com, “How to avoid mistakes dividing up 401(k) assets in divorce“, Sara O’Brien, March 7, 2018