In Marriage QDRO® As an Alternative to the In-Service Distribution

October 18, 2021 9:12 am Published by Leave your thoughts

An In-Service Distribution is often a valuable tool in planning a client’s financial situation. It allows your client to access funds prior to retirement, which affords them increased flexibility and control to pursue asset diversification. However, there are limitations to In-Service Distributions. What if:

  • Your client’s plan does not allow In Service Distributions (30% of plans do not)?
  • Your client is under 59 ½ years old and wanted to liquidate the funds without incurring the 10% withdrawal fee?
  • Your client wants to access more than the plan’s amount limitations?

What is your strategy to solve any of these situations? We suggest that you consider the In Marriage QDRO® (IMQ) strategy as an alternative to the In-Service Distribution without these three restrictions. It can be performed with any qualified retirement plan. All clients, at any age, can use the IMQ to liquidate funds without the 10% penalty when an important need arises. Lastly, there are no amount limitations. An IMQ is not limited to employee contributions; it can be used to transfer all vested interest in a 401k.

When a client’s financial planning objectives can be met by an In-Service Distribution, it should clearly be the first option. It is quicker, and more importantly, free. However, when your client’s situation falls outside what an In-Service Distribution can accommodate, an In Marriage QDRO® can be a valuable (and possibly the only) alternative. 

Check out the rest of our website to learn more about how the IMQ can be utilized for the benefit of your clients and your practice. 

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This post was written by Marcus Foote

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What’s in it for You?

401(k) Plans, Corporate Pension Plans, Profit Sharing Plans and State-Deferred Compensation Plans

A tool previously associated with divorcing spouses works for married couples, allowing them unrestricted access to retirement benefits without penalty. Unrestricted, non-penalized access offers more effective estate planning and protection opportunities for those who serve married clients.


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