Using a QDRO to Pay What’s Owed
Hi, I’m Tulsa Dads.Law attorney Clint Hastings. I focus on fathers’ rights and practice here in Tulsa, Oklahoma.
So, the question here is: In your divorce, you’re virtually certain that you’ll owe your spouse some money—can you use your 401(k) to pay it, by rolling over a portion to her through a Qualified Domestic Relations Order (QDRO)?
Using a QDRO to Pay What You Owe
Let’s say, for example, that you both contributed to improvements on a property, and you’re keeping the property. In return, you need to compensate her for her share. But you don’t have the cash on hand—though you do have funds in your 401(k).
Now, she may already be entitled to part of the 401(k) as a marital asset. That part will be divided anyway. But the question is: can you use additional funds from your 401(k) to pay the rest of what you owe her?
Considerations for Using Your 401(k) in Divorce Settlements
Yes, you can—if you both agree. You can roll over extra funds from your 401(k) to her, on top of her basic share, via a QDRO. That money goes into her own retirement account.
If she wants to take that money out immediately as cash, she can—but she would be responsible for any taxes and the 10% early withdrawal penalty if she’s under retirement age.
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The key point is: when you owe a substantial sum and have assets in your 401(k) but not in cash, using a QDRO to roll over funds can be a strategic and efficient way to satisfy the debt in your divorce settlement.
I hope this helps. Check out our website for more info, and if you have questions, give us a call at 918-962-0900 today to schedule an appointment with our experienced Tulsa divorce attorney Clint Hastings. Thanks.
