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Fighting for your 401(k) in your divorce

| Jun 3, 2021 | Divorce |

Past posts on this blog detailed the complexities of marital property division. The fact that you will have to divide up your shared assets with your soon-to-be ex-spouse during your divorce proceedings in Florida may seem logical. What might not, however, may be the notion that your retirement funds (specifically your 401(k) account) rank among marital assets.  

Indeed, many come to us here at Harris, Hunt & Derr, P.A. surprised to learn of this fact. You may have thought the only impact your divorce would have on your retirement would be in the change on who you would spend your golden years with. Yet losing a portion of your planned retirement income in your divorce may place your current retirement plans in jeopardy.  

Keeping your full 401(k)

This may prompt you to question whether you can keep your full 401(k) in your divorce. According to the 401(k) Help Center, you can, but only with the assistance of your ex-spouse. They would have to agree to forego their interest in your 401(k). To convince them to do this, you will likely have to give up your stake to another marital asset of comparable value. Yet while this may seem like a small sacrifice, it may require you to give up more than you think.  

Weighing the pros and cons

When valuing retirement assets, the court values them at their potential future value (after years of potential growth from investment returns and earned interest). This means that while you might measure the value of your ex-spouse’s stake in your 401(k) at its current value, in reality it may be much more. This should prompt you to consider whether the immediate financial sacrifice required to keep your full 401(k) will benefit you in the long run.  

You can find more information on marital property division throughout our site.