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Illinois divorcing couples may divide a 401(k)

Divorce can be complicated but may be especially difficult when a couple owns considerable property to be divided. Knowing what each spouse holds in assets and how to split them up can ease the process. Even a 401(k) can be divided if the proper steps are taken.

Since the funds added to a 401(k) are usually considered marital property, it will most likely be part of the division of property. Every plan has specific rules attached and understanding those terms might help a person develop a plan for handling the asset during division proceedings. This is especially important when the splitting of the account will occur before retirement age. If dividing the 410(k) proves to be difficult or results in an inequitable division, substitutes for the other party's portion of the account can be used instead. For example, property or other accounts can be offered in lieu of dividing the 401(k) assets.

If dividing the asset is feasible, it might be worthwhile for a person to pursue a QDRO. This order may assign a portion of the asset to a former spouse without incurring penalties for withdrawal. These documents must be cleared by the court and the plan's administrator. It might be beneficial for a person to inform the plan's administrator of the intent to end the marriage before pursuing the action because the QDRO may not be necessary.

Couples with considerable assets may need the help of an attorney to secure an appropriate property settlement when they plan to divorce. Dividing retirement plans and investments can be complex and result in unnecessary loss without knowledge of specifics. An attorney may be able to protect a client's interests during division negotiations with the other party.

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