Past posts on this blog touched upon the fact that as you enter into your divorce proceedings in Texas, your marital property becomes subject to equitable division. One asset, however, that you likely did not anticipate ranking among those assets is your 401(k).
Many come to us here at Katie L. Lewis P.C., Family Law equally as surprised to learn of this. Having to divide up your 401(k) (which you likely plan on having as a primary source of income during your retirement years) may dramatically impact your retirement plans. This may prompt you to ponder whether there is a way for you to keep your full 401(k) in your divorce.
Is this even an option? According to the 401(k) Help Center, it is (but not without a sacrifice on your part). To keep your full 401(k), you need to convince your ex-spouse to forget their interest in it. The only way to do this is likely to agree to relinquish your stake in a marital asset of comparable value. This may seem like a small sacrifice to keep your retirement plans intact, yet there are potentially significant costs to this decision.
In the aforementioned scenario, the court values the assets you ask your ex-spouse to give up at their potential future value. If you are both several years away from retirement, that value could be much more than you anticipate (given years of growth from investment returns and earned interest). This may require you to give up more right now for the right to keep those funds in the future.
You can find more information on this and other elements of property division by continuing to explore our site.