Kroener Hale Law Firm

We are here to listen, learn & help

TEXTS ONLY: 513-828-7510

We are here to listen, learn & help

TEXTS ONLY: 513-828-7510

During these hard and uncertain times, the staff at Kroener Hale Law Firm are still here to serve you. Please contact us at any time to schedule a free 30 minute telephone/skype consultation to discuss your legal needs. We will continue to diligently protect the rights and interests of our clients through these tough times.

Providing The Advice & Guidance You & Your
Family Need To Make Informed Decisions

Providing The Advice & Guidance You & Your Family Need To Make Informed Decisions

Ohio residents who may be splitting retirement account funds in a divorce settlement should understand how and what this may mean from a tax perspective. Employer retirement accounts like 401K accounts are held in only one person’s name. Under normal circumstances, that named participant is the only person legally allowed to receive money from the account. In addition, any distributions made to that person that are outside the scope of retirement may be subject to early withdrawal penalties or taxes.

The Internal Revenue Service explains that it may be possible to split the assets in a 401K account with a spouse as part of a property division settlement and avoid these penalties and taxes but only in certain circumstances. First and foremost, the use of a qualifed domestic relations order will be required. A QDRO is a legal way of establishing a person other than the plan owner as eligible to receive funds from the account.

In addition to a QDRO directing the transfer of funds to a non-account owning spouse, what that non-account owning spouse does with the funds may also impact penalties and taxes. In order to avoid these things, money received must be reinvested into another qualifying retirement account.

According to the U.S. Department of Labor, a person’s 401K account may also be used to pay spousal support or child support per a qualified domestic relations order. If used for spousal support, the recipient spouse may be responsible for taxes. If paid to a child or dependent for child support, the account owner will be responsible for taxes.