You worked hard for years and saved for retirement, but now you are also facing a divorce. What will happen now? Will you still have enough left to spend your retirement years as you dreamed after the dust settles?
As with other marital assets, the answer will depend on a number of factors, which include the overall value of your assets and debts, the length of the marriage, and how long you’ve worked at your current job. For those who had savings in a 401(k) or retirement account prior to the marriage, the court will consider this amount separate property, which will affect the overall division of the retirement account. In addition, federal and state government workers with FERS and VRS plans also have access to a pension, which the court may consider marital as well. If you have worked a significant amount of time for a government employer prior to the marriage, you will certainly want to contact an experienced family law practitioner prior to signing any sort of separation agreement to figure out who much your soon to be ex-spouse can possibly receive.
It is always best to be prepared when faced with the retirement asset distribution in a divorce. First, obtain a copy of your summary plan document. A summary plan document is a “manual” that your employer’s retirement plan administrator uses to calculate the benefits you will receive upon retirement. Second, immediately obtain a copy of your 401(k) balances and benefits that existed at the time of separation from your spouse, as well as what the balances were at the time that you entered into the marriage. This will help give your attorney an idea of will be considered marital. Third, do not move or withdraw any money from existing retirement accounts until you consulted with an attorney. You could face tax penalties or other legal consequences. Finally, consult with your financial advisor and CPA to help determine a long term strategy.
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This post is provided as an educational service and should not be construed as legal advice. Readers in need of assistance with a legal matter should retain the services of competent counsel.