[Mbailey821]

I'm currently going through a divorce in Illinois. We will be doing a QDRO's to split 401K's. Are both parties required to split each 401K or do they only split the parties that has the greater amount?

[ebaines]

Everything is negotiable in a divorce settlement. But I would think the easiest and most equitable way to do this is to split the difference between the value of the larger 401(k) and the smaller one. For example: if A has a 401(k) account worth $200K and B has a 401(k) worth $150K that's a difference of $50K. So a QDRO would be issued for A to transfer $50K/2 = $25K of his/her 401(k) to B. That way both parties end up with a total of $175K.

As you may know - it's imperative that the QDRO be worded correctly or an early distribution penalty and taxes may be owed on the amount transferred. If you have questions on the essential elements to include in the QDRO post back and we can provide more info.

[Mbailey821]

Ebaines,

Thank you for your quick response! Since you said it is negotiable, I'm guessing it is depending on cooperation from both parties to establish how it is actually done. Illinois is one of the states that does not follow most other states in regards to divorce guidelines, so I wanting to make certain I have my ducks in a row. I would guess that Illinois has a standard guidline to establish this. I'm meeting with my lawyer this weekend and want to make certain I ask the correct questions in order to have this done properly. Thanks again!!

[ScottGem]

If the guidelines are for an even split, then what ebaines suggested will work. But as she said, everything in a divorce settlement is negotiable.

[Mbailey821]

It did help to answer what the easiest way to split is. I am also wondering if there is a standard method if both parties cannot agree? I'm sure there is, but I'm not certain. All information I've researched doesn't touch this.Thanks Scott!

[ScottGem]

If both parties can't agree, then they may involve a mediator or leave it up to the court to order the split.

[Mbailey821]

Thanks again Scott! Are you familiar with Illinois divorce laws? I have another question. I was going to start another thread.

[ScottGem]

Not specifically.

[ebaines]

The only "standard" guidleine that I'm aware of is that retirement benefits such as a 401(k), IRA, and pension that are attained during the marriage are considered assets that are to be divided equally. So you can ether split the 401(k) right down the middle using the math I provided earlier, or you may decide to try to trade off your interest in your spouse's 401(k) for something else - for example "you keep your 401(k) and I'll take the car and the dog." Again, it's all negotiable, but be aware that if the 401(k) is not split 50:50 the spouse getting less than a 50% share will have to sign off on a waiver.

[Mbailey821]

Thanks again!