Many divorcing couples feel like they know what to expect, but there are likely elements that will come as a surprise even if you have a good handle on things. For example, many people do not know that their 401k falls under your divisible assets, and as such will often get included in property division.
Since marital income often contributes to a 401k, it falls under marital assets. Because many people rely on their 401k for their retirement plans, losing a portion can seriously upset any plan already in place. Can you avoid that by keeping all of your 401k?
Keeping the 401k
The 401k Help Center discusses the specific matter of who gets the 401k in a divorce. You actually do have a potential option where you can keep the 401k. However, it requires cooperation from your spouse. You will have to convince them to give up their stake in the 401k, and you cannot do this without forgoing your interest in another marital asset to keep things even and equitable. Ensuring this equitability is one of the best ways to get a spouse to agree to give up their stake.
The future value of your 401k
However, it is sometimes tricky to give something of equal value. This is due to the courts valuing property at their future value. It examines potential growth through earned interest and investment returns and uses this to base its decisions on. Thus, they may order you to give up more than the current value of the 401k due to the amount it may grow in the future. This is something to keep in mind before making this choice.
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