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Let a QDRO help you save retirement money

The first few months of a new calendar year can be a time when many couples in Tennessee make the decision to end their marriages. If you are in this position in 2018, you will want to learn about the ways in which you may be able to protect yourself financially. While certainly there may be no way to completely avoid some financial losses, there is definitely one way that may help to minimize what could be lost.

As the United States Department of Labor explains, a qualified domestic relations order is something you should be aware of if you must split your 401K account or other employer-sponsored retirement fund with your future former spouse. In most cases, if you take money from a 401K fund for reasons other than retirement, you must pay early withdrawal fees as well as income tax on the money you receive. In the case of a divorce, if you simply took out the money to be paid to your spouse and provided that to them, you would be forced to pay the penalties and taxes, reducing what you have left for retirement.

With a QDRO, money from your 401K can be paid directly to your spouse. This ability to bypass you altogether means you will not be on the hook for early withdrawal fees or taxes.

If you would like to learn more about the issues involved when splitting retirement funds and other assets in a divorce, please feel free to visit the qualified domestic relations order page of our Tennessee property division and divorce website.

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