As retirements plans are often part of 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'll want to keep the assets you're awarded in your divorce and invest them prudently so they will provide you with 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 open an account through a Financial Advisor or choose a discount brokerage firm, like a Charles Schwab. Both can offer advice on the proper methods of rolling over these funds to avoid any taxes or penalties associated with the withdrawal from your husband's 401K.
Determining the best way to invest your money will depend on various factors such as your age, your tolerance for risk, 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 might help ease your anxiety, especially if you aren't 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.
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