when divorcing, is there a $ penlty for dividing up a 401 act. and what is the percentage?

When a couple get a divorce from one another and one of them owns a 401k plan, it is clearly a marital asset and subject to equal property division under Wisconsin law. The 401k plan is typically divided by a document entitled a qualified domestic relations order (QDRO), and that divides the plan, without tax consequences to either party. If one party plans to keep the 401k as part of their property division and use other marital assets as an offset, there is a usual 20% tax withholding to discount the plan to offset what the future taxes will be paid on the plan. If the plan is divided by QDRO, the alternate payee is allowed to elect a cash out and not pay the usual 10% early termination penalty for cashing in a retirement plan prior to age 59 1/2, as an exception under the IRS tax code. this only applies in the case of a divorce, 401k plan, QDRO and only to the alternate payee, not to the employee who has the  plan. if they cash in their portion, they would pay the 10% penalty. If the election is made to cash in the 401k after the QDRO divides the plan, while the alternate payee does not pay the 10% penalty, they would be taxed on the portion they receive as unearned income and added to their other sources of income for that particular tax year.