Divorce is complicated not just emotionally, but many who face it have anxiety about protecting their assets. This includes the 401K and other retirement assets and benefits. Both divorcing spouses have claim to the other’s 401K or similar retirement accounts as these both contribute to marital property that they divide upon divorce. It’s important to realize that equitable distributions of the assets you and your estranged spouse share does not mean “fair” or “equal” distribution. Divorce is a complex process and it can require economic factors out of your control.
How a 401K Is Split in a Divorce
Splitting a 401K is not a cut and dry process; rather, it is complex and unique for every couple who gets divorced. There are a few general commonalities among spouses who divorce when it comes to splitting their 401K and retirement assets. An attorney and/or financial planner can help you understand how you’ll be affected and how much money you can expect to keep in the end.
You’ll have a number of options for divvying up the 401K in a divorce, but the 3 most common are:
- Both spouses both split the 401K assets
- One spouse gets to keep all of their 401K, while the soon-to-be ex-spouse takes marital assets of comparable value
- One spouse can cash out their portion of the 401K and pay the other a lump sum
Laws About the Division of a 401K
Your 401K funds will be divided 50/50 between each spouse, meaning if you were married 5 years and accrued $50,000 in your 401K, your spouse will be entitled to have of it ($25,000). This is not always so cut and dry, though, especially if your spouse has their own 401K. Your lawyer will advise you of the tax implications and unique legal hurdles you’ll face in splitting your 401K.
Contact Us at Tinny, Meyer & Piccarreto, P.A. for Legal Assistance
Splitting marital assets is a complex process. That’s why it is in your best interest to hire a divorce attorney to review your retirement plan and offer you sound legal advice as it relates to your impending divorce. A lawyer can draft a court order so a judge can sign off on what is called a Qualified Domestic Relations Order, or QDRO, which confirms that each spouse is entitled to a portion of the money.
To reach the law office of Tinny, Meyer & Piccarreto, P.A., please call (727) 245-9009 or reach out online to book your consultation with a member of our experienced legal team.
