A Hardship Withdrawal Due to Divorce

When you go through divorce, it can lead to many financial issues, including depleting your retirement savings. If you are in the process of going through divorce, you may be able to take a hardship withdrawal from your retirement account. In some cases, your retirement account may be split up as a result of a divorce.

  1. Hardship Withdrawal

    • When you are experiencing financial hardship due to divorce, you may be eligible to take a hardship withdrawal from your retirement plan. For example, in the case of a company sponsored 401(k), some plans allow you to take money out without providing a specific reason. If this is the case, you can withdraw money from your 401(k) to help cover legal costs and other expenses while the divorce is being finalized.

    Thrift Savings Plan

    • If you are a government employee, you may be eligible for the thrift savings plan. If you have money in the thrift savings plan, you may take part of it out through an in-service withdrawal. With an in-service withdrawal, employees can take money out of the account to pay for legal expenses as a result of a divorce. You may only take out an amount equal to your financial need.

    403(b) Withdrawals

    • If you work for a nonprofit organization a or a school system, you may be eligible to contribute to a 403(b) account. The 403(b) is very similar to the 401(k) in the private sector. However, with the 403(b) account, hardship withdrawals cannot be taken as a result of a divorce. You may take hardship withdrawals for unreimbursed medical expenses, the down payment on a primary residence, tuition for college or to help stop a foreclosure on your primary residence.


    • During the process of a divorce, your retirement account may be divided equally between you and your spouse. The money in a retirement account is considered marital property and is equally owned by both spouses. Because of this, during the divorce proceedings, the judge may issue an order to split up the assets in the account. When this happens, the retirement account provider will send part of the money to the other spouse. In this situation, the money is not subject to any penalties for early withdrawal.

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