Your divorce decree will stipulate what is to happen with the retirement plan balance. It is common to split the account into half.

In that case, a separate document, known as a qualified domestic relations order, is created to handle the asset split. This is what the 401k record keeper will need to split the balance. In that event, the balance is normally split and half put into the non-participant spouse's account in the plan.

Whether either of you take a distribution is another matter. It depends on the participant's age.

You don't have to split every individual asset right down the middle when you get divorced. If you have other assets you can agree between yourselves who gets what as long as the total is split according to the marital property laws of your state. For example, if she's keeping the house and it also has $75,000 in equity, you can simply agree that she gets the house, you get to keep your 401k balance.

If you do end up giving her a portion of your 401k in your property settlement, your will want a Qualified Domestic Relations Order, or QDRO, that will allow the money to be properly transferred to her from your 401k account. You will not have to open a new account. If the money is transferred directly into her own account, she won't owe tax on the transfer the year it is done.

You can read more about QDROs here: http://www.dol.gov/ebsa/publications/qdros.html