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How do we disburse 401k funds to a divorced spouse of our employee?

I have an employee who is being divorced. I am not sure how the 401k funds are to be distributed and if there will be a penalty. Can you provide some insight? The ex-spouse of a plan participant is paid a plan distribution only if she negotiates for and obtains a qualified domestic relations order (QDRO) from the court. The timeline will depend on the negotiated order. You should have received contact from the spouse’s attorney as the plan administrator to determine what and how the plan provides for. In any case, the monies are subject to 10% tax penalty if the employee is under retirement age.