A divorce can mean losing some of your shared assets, but is a 401k part of that division process? Yes, in most cases, retirement accounts will be part of your shared property.
What does that mean for you? You may want to be prepared to lose some of your retirement savings or be prepared to negotiate for the sole right to the account.
According to a survey conducted by the American Academy of Matrimonial Lawyers, there are three main things fought over during a divorce when the parties are ages 50 or older. They include alimony, which could be used to support a non-working or lesser-earning spouse, retirement accounts and pensions, which may represent all that’s left for retirement earnings, and business interests when both parties share business property.
These items are points of contention because people are starting to live longer and want to make sure their financial options are open. Keeping hold of things like business interests or retirement accounts means each person has more options in old age.
As the divorce rate for people over 50 rises due to longer life spans and both spouses working with successful careers, it’s a fact that people are less likely to stay in unhappy marriages when they are able to live life comfortably without having a spouse. The issue is that when both parties share retirement or 401k accounts, those accounts must be divided on divorce. Fortunately, they can also be solid negotiating tools, so if you’re planning on filing for a divorce, an attorney can help you negotiate with the assets you have at hand.
Source: Yahoo Finance, “Can You Lose Your 401k in a Divorce?,” Fox Business, Aug. 11, 2016