• Home
  • Divorce Mediation
  • Divorce Consulting Expert
  • Coaching
    ▲
    • Co-Parenting Coaching
  • All Services
    ▲
    • Collaborative Divorce
    • Divorce Mediation
    • Divorce Consulting Expert
    • Divorce Support Groups For Men
    • Divorce Support Groups For Women
    • Divorce Coaching
    • Co-Parenting Coaching
    • Post-Divorce Transition Support
    • For Attorneys
      ▲
      • Business Valuation Services
      • Forensic Accounting
      • Collaborative Divorce
      • Denise French
      • Shelli Dodson
  • Blog
  • About
  • Work With Us
    ▲
    • Contact
    • Schedule An Appointment
    • Pay Now
  • Post Divorce Transition Support
    ▲
    • Men’s Support Group
    • Women’s Support Group
    • Community Services
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

281-505-8177
CONTACT US

SCHEDULE A
FREE CONSULTATION

Contact Us: 281-505-8177

Divorce Strategies Group

Divorce Strategies Group

Denise French

  • Divorce Mediation
  • Divorce Financial Advisor
  • Coaching
    • Divorce Coaching
    • Co-Parenting Coaching
  • All Services
    • Divorce Mediation
    • Divorce Financial Advisor
    • Divorce Support Groups For Men
    • Divorce Support Groups For Women
    • Divorce Coaching
    • Co-Parenting Coaching
    • Post-Divorce Transition Support
    • Collaborative Divorce
    • For Attorneys
      • Business Valuation Services
      • Forensic Accounting
      • Collaborative Divorce
  • Work With Us
    • Contact
    • Schedule An Appointment
    • Pay Now
  • For Attorneys
    • Business Valuation Services
    • Forensic Accounting
    • Denise French
    • Shelli Dodson

A Tip That Can Save You Thousands: Dividing a 401-K in a Divorce

August 8, 2018 By Denise French, CVA, MAFF, CDFA, CRPC Leave a Comment

[three_fourth_last]money and divorce

As part of your divorce, are you receiving all or part of your former spouse’s 401-K? You may have an opportunity to take cash out of the account without paying the IRS’s 10% penalty (on funds withdrawn prior to age 59.5). To take advantage of divorce and 401K benefits, when dividing a 401-K in a divorce, have the portion you need, paid directly from the account to you. It does not need to be the full amount that you are receiving. You do not want to roll it into an IRA and then take it out because then you will be subject to the penalty.

Am I suggesting that retirement plans are a good source of cash when going through a divorce? Let me be clear. No, I am not suggesting that at all. I simply want to share that if you have a cash need and it makes the most sense to take it from a retirement account, the IRS does give you an opportunity to take money without penalty. Keep in mind, though, if the funds are in a pre-tax account, they will still be taxable when withdrawn. The plan administrator will withhold taxes when the distribution is made. However, it may not be enough to cover your tax liability, depending on your marginal tax rate, so you’ll want to plan accordingly.

How do I know how to best divide the 401-K in my divorce?

It is best to consult with your financial advisor and/or tax professional to determine the best source of cash for your individual situation with a divorce and 401K, especially when considering taking an early withdraw from a retirement account. Unfortunately, some professionals may not be familiar with this rule, which is one of the benefits of working with a CDFA (Certified Divorce Financial Analyst), who has specialized training in divorce financial planning. A CDFA can help you make the right decisions when dividing your 401-K and other assets in a divorce. A CDFA will help you maximize the money you receive while minimizing your taxes.

For questions or assistance with accessing the best source of cash for your particular situation or divorce and 401K information, schedule a no-cost consultation with our firm by calling 281-210-0057.

Filed Under: Dividing Property

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Recent Posts

  • High Stakes, High Net Worth:
  • Why Choose Mediation Instead of Court?
  • New Year New You: Three Resolutions Worth Making
  • Texas Divorce Mediation
  • Back to School Basics for Busy Co-Parents

Recent Comments

    Archives

    • January 2023
    • December 2022
    • August 2022
    • June 2022
    • May 2022
    • January 2022
    • June 2021
    • May 2021
    • April 2021
    • March 2021
    • February 2021
    • January 2021
    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • August 2020
    • July 2020
    • June 2020
    • May 2020
    • April 2020
    • March 2020
    • February 2020
    • January 2020
    • December 2019
    • November 2019
    • October 2019
    • September 2019
    • August 2019
    • July 2019
    • June 2019
    • May 2019
    • April 2019
    • March 2019
    • February 2019
    • January 2019
    • November 2018
    • August 2018
    • July 2018
    • June 2018
    • April 2018
    • February 2018
    • January 2018

    Categories

    • Alternative Dispute Resolutions
    • Dividing Property
    • Divorce Coaching
    • Divorce Finance
    • Divorce Support
    • Family & Children
    • Mediation
    • Uncategorized

    Meta

    • Log in
    • Entries feed
    • Comments feed
    • WordPress.org

    Footer

    Copyright © 2023 - All Rights Reserved | Web Design by The Crouch Group | Log in