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What to do with your 401k?

On Behalf of | Apr 3, 2020 | Firm News |

As you enter into your divorce proceedings in Sacramento, you should prepare to encounter at least a few surprises. Many feel as though they understand everything they could encounter when working through their divorce, yet the complexities of the process will almost assuredly throw you a few curveballs. 

One of these may be the division of your 401k. As your 401k account is largely a result of your own individual efforts, you may question why it would even be subject to property division. Remember, however, that the contributions made to it during your marriage came from marital income. Thus they are also considered to be marital assets. 

Dividing up your 401k 

The most common way to divide up a 401k during divorce proceedings is to simply split the account into two separate accounts. You maintain control of one while your ex-spouse’s portion of the contributions rolls into the other. Splitting the account may be unnecessary if your ex-spouse already has an established retirement account (in which case they can simply have their portion moved into that account. Your ex can also elect to simply leave their portion in your account and simply ask to start receiving distributions when they reach the age of retirement just as you would. 

Keeping your full 401k 

The 401k Help Center offers a suggestion if you want to try and retain the full value of your 401k. You would need to relinquish your claim to a marital asset with a value comparable to that of the 401k contributions you are asking them to give up. This may seem fairly straightforward, yet you should remember when making this request that the value the court compares those contributions to is their projected future value (with growth from investments and interests).