Ask Terry Questions opening 401-K with QDRO

opening 401-K with QDRO

By Terry Savage on August 09, 2018 | Financial Planning / Retirement

In the divorce settlement I have received a part of 401K from my spouse ( QDRO ) and would like to open my own 401K with that money.
My company doesn’t offer 401-K and I don’t have one as of now, so I was just wondering what my options are.
I work for the franchised company and have 10% ownership in it.
I will appreciate very much any advice you can offer.

Terry Says

The time to do this was through a direct division of retirement plan assets at the time of your divorce. Have you already taken a check for this money? Or is it still sitting in your spouse’s retirement plan???

If it’s still in your spouses’s plan, then you can present the plan custodian with a QDRO order (qualified domestic relations order) and they will ROLL IT OVER DIRECTLY TO A NEW CUSTODIAN, as an IRA rollover in your name. But first you will have to open the account at the new custodian (I suggest calling Fidelity — 1-800-FIDELITY) where they will set up the account. They should handle this entirely with your spouse’s plan — and each plan will need a separate, notarized letter of instructions, including the court order.

If you have already taken the distribution from your spouse’s plan it may be too late to do a rollover. But in any case, you cannot roll it over into a 40l(k) plan. And you should start your own, separate IRA to start saving for the future based on your own work income.

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