Every aspect of your divorce requires your full attention, and this is especially true when it comes to retirement accounts. If you ignore this now, you could regret it at some point in the future, such as when you want to retire.

If you’re on the receiving end of a 401(k) distribution, it’s imperative to understand your options for obtaining the money. The decision you make will impact you in many ways, including when you can access the funds and how it alters your tax circumstances.

Here are your three options:

  • Roll the assets into your own retirement plan, such as an IRA: This allows you to receive the money without any fear of paying a penalty or taxes.
  • Defer your distribution: You can defer a distribution until your ex-spouse retires, which will then allow you to decide between a lump sum or receiving payments.
  • Cash out: This allows you to gain immediate access to the money; however, it can cost you. If you’re not yet 59 1/2, you will pay both income taxes and an early withdrawal penalty.

You have a lot to think about during your divorce, but don’t let a busy mind cloud your judgment. Carefully consider the pros and cons of each option, as you want to do what’s best for you now and in the future.

Don’t be surprised if your soon-to-be ex-spouse fights back during discussions on property division. It’s easy to give in and fight for assets other than a 401(k) distribution, but doing so could hold you back from retiring in the future.