401k rollover question


#1

When 401k is divided upon divorce do they use the amount as of the date of separation, the amount as of the time of divorce or the amount accrued during the marriage?

I am separated and will be filing in May. I also started a new job and have to roll over my 401k. Does it make more sense to just roll it over and do the QDRO or roll it over into two accounts and split it 50/50 based on the value on the date of separation?

If I do the QDRO as part of the divorce am I able to get my portion cashed out and avoid taxes or does she just receive her part tax free and I have to keep my portion in the 401k account? (basically want to be able to use my half of the 401k for moving, attorney etc.)


#2

I would wait to roll anything over until you have an agreement. Usually, the amount that is divided is the balance as of the date of separation plus or minus any passive gains or losses. You cannot make a withdraw without incurring the early withdraw penalty, but you can make it part of the agreement that she get 100% but that once it is cashed out, you get your 50% minus taxes. This makes it more difficult and a little more time consuming, but if you are taking out a large sum, it makes sense to do it this way to avoid the penalty.


#3

We already have an agreement that she is to get 50% of the 401k (settlement agreement) upon the cashing out of the account. When that happens is really up to me. Since I have a separation agreement in place (notarized but not through the courts) would the same apply or could I use that notarized agreement to give her her half and then roll my half into an account?

I just want any ties severed as soon as they can be.


#4

You should have the account divided using a QDRO and then do what you want with your 1/2 of the account.


#5

Its depend on your agreement that you have mentioned or not. But according to rules you may divide 1/2 of account.