Divorce - 401K Settlement RolloverAs retirements plans are often part of the property distribution during divorce, 401K settlement rollover is something that need to be considered. When you receive a portion of your spouse's 401K as part of the divorce settlement, you are given a certain amount of time to invest it into your own account. The following advice can give you insight into how you should approach such a situation. Roberta's Question: I was awarded part of my husband's 401K and have to take action within 30 days to rollover my part to avoid the 30% penalty. What would be the best route to take and what kind of investment should I consider? Timothy's Answer: Properly managing a divorce settlement is very important. You will want to preserve the assets you are awarded and prudently invest them so they can provide you an income stream in your retirement years. The first thing you need to do is open an account with a brokerage firm. You can either choose a discount brokerage firm, like a Charles Schwab, or open an account through a Financial Advisor. Both can advise you on how to properly rollover your funds from your husbands 401k so you will avoid any tax penalties associated with the transaction. Deciding on how best to invest your money will depend on many factors such as, your age, your risk tolerance and your liquidity needs. The discount brokerage firms can offer some guidance, but you are more likely to get personalized attention if you work with a financial advisor. It sounds like working with a financial advisor may ease your anxiety, especially if you are not familiar with investing concepts. I highly encourage you to work with an Advisor that has professional credentials and experience with divorce finance. My office has a guide published by the CFA Institute on “How to Choose a Financial Advisor.” You should be able to find this guide yourself on the Internet.
Related Articles: Timothy McNamara is a certified divorce financial analyst, specializing in the financial issues that couples and individuals face when their marriage ends. Having gone through a divorce himself, he is passionate about helping people understand and manage the complicated financial issues divorcing couples often face. This column is not intended to take the place of professional advice, but rather to provide financial information about the various issues that arise in a divorce. For specific recommendations concerning your situation, you should retain an experienced certified divorce financial analyst who can answer your questions based on the details of your case. WomansDivorce.com, Timothy McNamara, and Tracey Manzi disclaim any liability from any claim arising from any information contained in this column. This column is not a substitute for professional advice. Divorce
Process / Children
and Divorce/ Emotions
and Divorce Home / Divorce
Guide / State
Resources
|
