Your divorce is bound to bring with a certain deal of uncertainty. Years and years of married life have likely led you to expect a specific standard of living, yet achieving that after your marriage is officially over may be difficult (especially without your ex-spouse’s income supporting you). Alimony (spousal maintenance) may be an option, but depending on where you are at in your life (as well as your ability to quickly secure gainful employment), it may not become a guarantee. Knowing this, suddenly the need for funds to help secure a new residence, relocate or simply support yourself during your post-divorce transition becomes much more urgent.

Looking to the funds from a 401k

Your ex-spouse’s 401k could potentially offer you a quick infusion of capital to help ease the burdens that inherent with this transition. As the contributions made to their 401k during your marriage came from marital income, these may become marital assets and thus subject to property division. You may have a legal claim to a portion of these contributions if you do not have your own retirement savings or if those that you do are significantly less than what your ex-spouse accrued.

Yet, is it even possible to withdraw funds from a 401k prior to retiring? Typically, such an action would result in an early withdrawal penalty that can be up to 10% of the disbursement (making it a high price to pay to see such money now). According to CNBC.com, divorce is one of the rare scenarios where you can make an early withdrawal of 401k funds without penalization.

Determining worth

The next step is then to determine whether to actually go ahead with the withdrawal. Keep in mind that while you can avoid the early withdrawal penalty, you still have pay income tax on whatever disbursement you take. Plus, rolling your portion of the contributions into your own retirement account allows your contributions to produce additional income through interest and investments. However, depending on how close you are to retirement, those potential gains could be minimal compared to the benefit of having the money right now.