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What happens to a 401(k) in a divorce?

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Some readers from Illinois may wish to learn more about what can happen to a 401(k) in the event of divorce. In general, 401(k)s are subject to distribution during divorce under similar guidelines as other assets; however, the extent of each spouse's contribution can inevitably provoke a significant impact.

In order to determine the extent to which a 401(k)'s assets can be redistributed, a court may issue a qualified domestic relations order. A QDRO is intended to set the terms under which someone other than the original owner may benefit from the assets available in a 401(k). There are specific legal procedures for verifying and drafting a QDRO, and if these are not adhered to, the QDRO may not be considered valid.

To be considered legally valid, a QDRO must have been properly submitted to the 401(k) administrator. The administrator would then need to have notified both the original payee and the alternate beneficiary that the order was received. In addition, the administrator would be required to validate the QDRO's authenticity and provide information to both original and alternate payees of this fact within at least 18 months. Moreover, a QDRO must contain information about the payee in order to be considered valid, including the individual's name and last known mailing address, the percentage of the account subject to distribution and other relevant information.

If someone is involved in a divorce that includes possible 401(k) assets, they may wish to discuss their situation with an attorney. An attorney may assist them in the creation of a QDRO or help verify the authenticity of one that is already made. In addition, it may be beneficial to have legal representation if it becomes necessary to advocate on one's behalf before the opposite party.

Source:, "401(k) and Divorce", December 24, 2014

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