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Old 12-04-2009, 09:43 AM
 
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Done some research and am still confused.

When the judge divides 401k(s) his/hers...doesn't matter-
Then the QDRO papers get filed with the company in this case Charles Schwab.

The divorce attorny says I'll get a check for the amount listed. But Charles Schwab says- in a bunch of words using several pages that
the retirement account will be sub- adding my account. Then they go on about investments....

I want a check, not an account w/ Charles Schwab.

How do I make that happen?

One of the concerns I have is there is no penalty for withdrawing the funds due to the divorce...but if an account is set up in my name then I withdraw and close it- wouldn't the penalty hit me then?
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Old 12-04-2009, 09:58 AM
 
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My guess is that Charles Schwab is under the impression that you don't want to be hit with penalty fees and so they are starting a new account in your name alone with your split of the 401k. You are then free to transfer that account to a new investment firm without getting taxed/penalized, but if you want a check you will be paying taxes/penalty.

This is just my guess, I could be wrong.
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Old 12-04-2009, 10:16 AM
 
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There are very few exemptions for penalties...and divorce is one of them. Taxes are a given no matter what.

So they MUST create the new account and then let me withdraw the funds...this is how to avoid the penalty?
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Old 12-04-2009, 10:39 AM
 
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I believe you are mistaken. There is no provision to avoid the penalty for withdrawal by getting divorced, the divorce can trigger a penalty free rollover.

If you do not want to rollover the formerly shared amount into a new separate IRA you will have to pay the tax man. Your attorney should explain this to you. If you want "spend able cash" from your ex that is a different matter, and the purpose of the 401K when you are either married or single is for RETIREMENT, it is frankly very prudent to roll it over --odds are you will need it later.

You can have the IRA with any qualified trustee, not just Schwab. Pick the trustee you want and have the IRA set up there ...
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Old 12-04-2009, 12:15 PM
 
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I double checked the references on 401ks and divorce. Seems that if the plan is currently with Schwab it'll have to stay there UNLESS the employee with the plan is 59 1/2 or they have left the employer and are eligible to roll it to an IRA...
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