As you enter into your divorce proceedings in Lincoln, you will inevitably be presented with several questions. “Who gets custody of the kids” and “Who gets to keep the house” are among the most common, and thus questions that you will likely be prepared for. “Who gets the 401k” is likely one that you are not anticipating. Many come to us here at the London Law Office PC, LLO questioning why a 401k would be included in property division proceedings. Because contributions to such an account made during your marriage come from marital income, they are considered shared assets. The question then becomes how such assets can be divided.
Typically, the court will issue a Qualified Domestic Relations Order stipulating that the original 401k be split into two accounts, with both you and your ex-spouse maintaining controls over your respective accounts. This allows each of you to control your own invest strategy and gives your ex-spouse the option of making further contributions on their own.
Yet you may be concerned about the impact that dividing up your 401k will have on your retirement plans. If this is so, the 401k Help Center suggests a potential solution. You can push to retain the full value of your 401k in your divorce settlement. You would simply need to relinquish your claim to another marital asset of comparable value.
If you choose to explore this option, be prepared to potentially have to give up more than you initially bargained for. The value of your ex-spouse’s 401k contributions is based off their future potential value, so the marital asset you give up in exchange could be significant.
You can learn more about the details of property division by continuing to explore our site.