On behalf of Stange Law Firm, PC posted in divorce on Monday, June 17, 2019.
One going into divorce proceedings in Jackson County may have no issue in dividing up their marital property between themselves and their ex-spouse. Where they may be hesitant to share are those assets that they view as being the results of their own individual efforts. These may include one’s workplace retirement accounts (like a 401k). Their hesitancy to part with even a portion of such an asset is understandable; at the same time, as 401k account contributions comes directly from their income (of which that which was earned during their marriage is considered marital property), one can see why 401k contributions are considered a shared asset.
Ultimately, one may simply fear that the money they worked so hard to earn towards their retirement will simply go to waste. Such a fear may not be unfounded; according to information shared by CNBC, a divorce is one of the few cases where early withdrawals may be made from a 401k account without incurring the standard 10 percent tax penalty. However, leaving the money in the account gives it the opportunity to grow through investments and earned interest. Thus, 401k account owners may want to consider trying to retain their account’s full value in their divorce proceedings.
The 401k Help Center shows how this might be possible. First, one should identify another marital asset that has comparable value to the amount of 401k contributions owed to their ex-spouse (and also has sufficient sentimental value that would prompt their ex-spouse not to part with it). One then can offer to relinquish their claim to any ownership of that asset. In exchange, the ex-spouse would forego their share of the 401k. Such an agreement would allow both sides to walk away with equal value, and should be acceptable to the court.