How Do I Protect My 401k During a Divorce?

Saving for retirement is important for every worker in the United States. Contributing to a 401k is a great way to set aside money and grow your wealth in preparation for retirement. If you are going through a divorce you may wonder if and how the account will be divided. For help protecting your 401k during your divorce speak with an Oakland County property distribution lawyer.

What is a 401k?

There are several accounts that people contribute money to while in the workforce to prepare for retirement, one of which is a 401k. A 401k is a retirement savings account that provides tax advantages to account owners. Employers can provide their employees with access to a 401k account and the employee can contribute a percentage of their paycheck to the account. Some employers match those contributions or contribute a portion.

Are 401ks Subject to Property Division?

When going through a divorce, property division is a main issue that needs to be tackled. It must first be determined what assets are considered marital property and what assets are considered separate property.

Generally, any assets acquired during the marriage are considered joint property and therefore subject to division. Looking at a 401k account, any money contributed before the marriage will likely be considered separate property. However, contributions made after the wedding are likely to be divided between the employee and their spouse. Depending on the length of the marriage and the percentage of salary that is contributed toward the account it could be a significant amount of money.

How Can I Protect My 401K During My Divorce?

If you have been contributing money toward your 401k for a long time you probably want to take ownership of the total and sacrifice little or none of it to your spouse. It is unlikely that you will be able to retain the total amount but there are actions you can take to protect your 401k account.

• The best way to protect yourself and any assets that you have during a divorce is by hiring a skilled attorney. Divorces and separations can be messy and there are a lot of moving parts involved. It is important that you work with a lawyer who has experience dealing with divorce cases and who understands your rights and how to best protect them.
• Draft a QDRO (Qualified Domestic Relations Order). A QDRO is a legal document required for the division of certain retirement accounts including 401ks. The document will list the details of the division and how the non-employee spouse will be given their portion of the benefits.
• Be open and honest about your account. You will need to gather statements and proof from the account that shows how much you have contributed, how much your employer matches, the amount in the account, etc. Attempting to conceal assets during a divorce can have negative consequences so be truthful and organize all relevant evidence.
• Offer up other assets in exchange for your retirement account. If you want to avoid the hassle of splitting your 401k, consider negotiating with your spouse. Offer to give them something else of equal value during the divorce.