Solo 401k and divorce

[N Martin]

If someone has a solo 401k and the other spouse wants one of the investment properties as part of the divorce settlement and make it her new personal residence is that possible? 

[Brian Eastman]

@N Martin

During a divorce, retirement assets can be split.

The divorce settlement will result in a "Qualified Domestic Relations Order" (QDRO) that documents the fact that a portion of your 401(k) value will be allocated to your ex-wife.

She could move the property to her own 401(k) or IRA tax free.

If she chooses to take the property personally, then it will be considered a distribution and the current appraised value of the house will be treated as taxable income.  The divorce situation and QDRO event will eliminate a 10% penalty that would normally apply on a distribution taken before age 59 1/2.

The transaction itself is somewhat complex.  Check with your plan provider and/or an ERISA qualified attorney for guidance.