Texas is a community property state and requires dividing income and financial assets in half during a divorce. As noted by SmartAsset.com, community property laws affect assets owned jointly by two spouses regardless of who contributed the money to acquire them.
Under certain conditions, you may receive half of the value of your spouse’s retirement fund. Even if you did not work or contribute money to a 401(k)’s growth, your household’s marital income went toward the fund. The account requires dividing, and you may receive half of the portion that grew during your marriage.
How may I receive half of a spouse’s retirement fund?
Proceeds from each of your spouse’s paychecks went into a retirement fund when it could have gone into your household. To receive a distribution, you may request a direct transfer from its current balance into your own retirement account.
If you have not yet turned 59-and-one-half years of age, you could incur penalties by withdrawing funds from a retirement plan. You may, however, avoid penalties by rolling the funds into your individual retirement account. You may also choose to wait until your soon-to-be ex-spouse retires. You may then request regular payments that could help support your single lifestyle.
When may I also receive a part of my spouse’s IRA funds?
Kiplinger’s Personal Finance notes that spouses may divide an IRA and request a direct transfer from one trustee to another. You may also use the value of an IRA to negotiate your divorce settlement. While dividing properties in half, you could discuss trading one asset for another.
An understanding of both the divorce laws and financial factors affecting retirement funds and property could work to your advantage in obtaining a favorable settlement. It may make a significant difference in the financial security you find in your new life as a single person.