As you prepare for your divorce proceedings in Texas, you may believe yourself to be ready for any potential challenges that may arise. Yet like many of the those that we here at Sanchez & Farrar, PLLC work with, the fact that your 401(k) is subject to property division may come as quite a surprise.
Contributions to your 401(k) during your marriage come from marital income, thus making them marital assets. You may have firm retirement plans in place, and those plans likely rely heavily on the amount you anticipate coming from your 401(k). Losing any portion of it may thus dramatically impact your retirement plans. Therefore, you may wonder whether keeping your full 401(k) is an option.
Relinquishing your claim to another marital asset
According to the 401(k) Help Center, you can retain the full amount of your 401(k) in your divorce if you are able to convince your ex-spouse to give up their stake in it. To do that, you likely will have to forego your interest in another marital asset in exchange. Ensuring that asset is of comparable value may help sell them on your request.
Protecting your own best interests
Yet what is “comparable value” in this context? When making a request such as this, the court having jurisdiction over your case values the assets that you hope your ex-spouse will give up at their potential future value. That is after experiencing any potential growth that may come through investment returns and earned interest. Thus, while you may base your decision on your 401(k)’s current value, the court may actually require you to give up more than you anticipate. This should factor into your decision.
You can learn more about dividing up marital assets by continuing to explore our site.