I had always been told that my 410k retirement fund was safe from creditors but now I'm told that I could be forced to liquidate some of my 401k for child support or alimony. Is that so and if it is what about the tax consequences of an early withdrawal like that? Does it matter if it is court ordered?
Search Existing Questions
Login to Post Questions
Tell Us What You Think
The Editor, Mark Bernardin, is an attorney living in MA. Please send your suggestions or comments to: TheEditor@malawforum.com
Disclaimer
The answers and information provided on this site are for informational purposes only and are NOT substitutes for professional legal advice. Before making legal decisions, you should discuss your specific circumstances with an attorney.
Divorce, retirement accounts and QUADRO
Yes, that is true: Even though 401k's and other retirement accounts enjoy protection from most creditors, courts can order that the funds be used for child support or alimony. Similarly, the retirement accounts can be divided pursuant to a property division ordered by the divorce court.
You can read this post dealing with retirement accounts in divorce for more information. That post also discusses a solution that the U.S. Congress came up with to deal with the possible tax consequences of accessing retirement accounts in a divorce. A Qualified Domestic Relations Order QUADRO is a court order that is served on the employer of the spouse who owns the retirement account. The order allows some portion of the retirement account to be transferred to the retirement account of a spouse without causing the employee/spouse to incur tax penalties. Because a QUADRO may be used in different ways depending on the circumstances of the divorcing parties, you should discuss your situation with an attorney. Good luck.