During a marital breakup, an individual may understandably be concerned about how to handle property division. Specifically, he or she might be confused about how to split years’ or even decades’ worth of retirement assets. Here is a look at how a 401(k) can be split during divorce and dissolution in Ohio.
Many employees today use 401(k)s through their companies to prepare for their retirement years. Figuring out a plan’s value is generally straightforward since it features cash value, and as a result, splitting 401(k)s usually is not complicated, and parties may account for any separate property or passive growth when allocating the assets to each spouse. However, the court will choose to split this type of plan in the manner it deems proper by using a document called a qualified domestic relations order, or QDRO.
People who receive 401(k) payments following divorce can simply roll their payments into their own separate retirement accounts. Usually, if people take money out of a 401(k) before they reach the age of 59 and ½, they will incur a 10% penalty. However, if they use QDROs to handle the distribution following divorce, they can avoid this penalty. Still, income tax must be paid on any payments obtained and spent.
Dividing retirement assets and other types of property can understandably cause conflict during divorce and dissolution. However, if the couple can arrive at an agreement regarding asset distribution through negotiations or mediation, they can complete their family law proceeding more quickly than they would if they went to trial. An attorney in Ohio can provide the guidance needed to pursue a personally beneficial outcome either outside of court or at trial, depending on the circumstances.