During a divorce, the idea of splitting up all of your belongings can be overwhelming and frightening. If you have a retirement account that you have been contributing to it can be jarring to learn that your spouse may be entitled to a portion of that money. Read on and speak with a Sparta property distribution attorney to learn how you can protect your 401(k) during your divorce.
What is a 401(k) Account?
A 401(k) is a retirement plan that benefits millions of American workers. Employees have the option to contribute a percentage of their salary to a retirement account that typically cannot be touched until they retire. Employers often match their employees’ contributions up to a certain percentage as a benefit.
Are 401(k) Accounts Subject to Asset Division During a Divorce?
Whether or not the money in a 401(k) is subject to asset distribution during a divorce will depend on the specifics of the account. In a divorce marital property is subject to division while separate property remains with the individual owner.
One may think that because only one of the spouses contributes financially to the 401(k) account it is separate property, but that is not necessarily true. Money contributed to the account when the couple was not married can be considered separate, but in general assets that are acquired during the marriage are classified as marital property. Any money that went into the retirement account during the marriage is subject to asset division.
What Should I Do to Protect My Retirement Account?
Consider the following when deciding how to best protect your 401(k) during your divorce.
- Work with an attorney to protect your account. They will have a knowledge of the law and an understanding of your rights. Hiring a skilled lawyer will be the best way to protect your assets. Work with them to find evidence of why you deserve to retain the majority or total of your 401(k) account.
- Consider compromising on other topics during the divorce. If you want your spouse to not take any of your retirement account, consider what they want from the division of assets. Sacrifice something that you know they want in hopes that they return the favor when it comes time to discuss your 401(k). Or negotiate with the help of your lawyer. You may offer to give up something of equal value in exchange for the entirety of your account.
- Be prepared to contribute more to the account. Once some of the money is taken out and transferred to your spouse you might feel the account is a little light. It is important to be prepared for retirement so plan how you might be able to contribute money back into the account. You are probably going to receive payments from selling your family home or other assets which can be used to start building your retirement account back up.
