Distributions received before age 59 1/2 are subject to an early distribution penalty of 10% additional tax unless an exception applies.
If the account owner is below 59 1/2 and is taking a distribution - he/she generally will be responsible for 10% early distribution penalty.
Please refer to the IRS publication 575 - http://www.irs.gov/pub/irs-pdf/p575.pdf page 31 : Additional exceptions for qualified retirement plans. The tax does not apply to distributions that are:
-- From a qualified retirement plan (other than an IRA) to an alternate payee under a qualified domestic relations order...
So if the transfer to the alternative payee is under QDRO - it is not a subject of penalty,
but if a new owner would take a distribution - he/she will be responsible for penalties.
see also page 19:
Alternate payee under qualified domestic relations order. If you receive a distribution as an alternate payee under a qualified domestic relations order, you may be able to choose the optional tax computations for it. You can make this choice for a distribution that would be treated as a lump-sum distribution had it been received by your spouse or former spouse (the plan participant). However, for this purpose, the balance to your credit does not include any amount payable to the plan participant.
If you choose an optional tax computation for a distribution received as an alternate payee, this choice will not affect any election for distributions from your own plan.
if the distribution would take place from the account established for the alternate payee - and the beneficiaries would request the distribution due to death of the owner - it is not a subject of penalty.
see page 31 - The tax does not apply to distributions that are:
-- Made on or after the death of the plan participant or contract holder.
To avoid possible litigations - be sure that the administrator reports on the 1099-R the distribution code "4"