The process of getting divorced can feel like a loss of many important parts of your life. In the midst of divvying up your belongings, moving out of the house, and becoming acquainted with what it means to be single, big things can happen to your retirement savings and your 401k. It’s critical to stay level-headed and aware of what to do to protect your future by guarding your assets.

You’ve worked your whole life to make sure your retirement is secure—and now you and your spouse are divorcing. If you’ve been contributing to a 401k during the marriage, it will be considered part of the marital property in divorce. How it will be divided will depend upon many factors, but there’s no need to panic. Family law attorneys like those available at Semmes Law Firm are your best bet at fighting to keep your 401k during your divorce.

Who Gets Your 401k During Divorce?

It’s critical that you do not attempt to hide your 401k or call up your plan administrator to try to block your spouse’s attorney access to the plan information. Shady, hasty actions will get you nowhere. Your spouse is entitled to this information (if a subpoena is issued). However, if your spouse also has any retirement accounts, you are also entitled to his or her plan information.

You will want to make sure there are no withdrawals from any of the plans during the divorce proceedings. While both you and your spouse are entitled to the plan information, usually, neither of you can make a withdrawal from any of the accounts during the divorce proceedings without permission of the Court. Doing so will only lead to legal trouble in the future – and taking money out of a retirement plan like a 401k during the divorce process can make you responsible for repaying what you withdrew from the marital estate.

Every plan has its own rules. For instance, some plans may allow the other party to take his or her share of the retirement account once the divorce is final. Other plans may hold the funds until retirement age even though the parties have divorced. It is best to sit down with your plan administrator before filing for divorce so you know all of your options. Your divorce attorney is also available to go over this documentation for you so you know where you stand.

Common Divisions of 401k’s and Retirement Plans During Divorce

The following options are common when 401k’s (and other retirement) accounts are being divided up during a divorce:

  • Split Retirement Assets – Both parties can decide to evenly split all retirement accounts after the divorce. This will require a Qualified Domestic Relations Order. However, there are significant complications and legalities when drawing up this document, so make sure you are using a divorce attorney experienced and knowledgeable in this area. Usually in Alabama, the Court can award up to one-half of the retirement assets of a spouse accumulated during the marriage to the other spouse. Sometimes this will lead to an offset if both spouses have contributed to their individual retirement accounts during the marriage.
  • Asset Tradeoff – If you’d like to keep your account intact, you can offer to give up other marital assets in place of the 401k. This can also get a bit technical because your soon-to-be ex’s attorney will more than likely bring up the long-term value of the account as well as any tax implications resulting from the settlement.

Two other possibilities are the liquidation of a part of the retirement account to pay off your spouse OR rolling over your spouse’s portion of the retirement account into an IRA. Both of these options have distinct restrictions, however, and can only be used in specific situations.

Speaking with Semmes Law Firm’s compassionate, experienced family law attorney for a consultation is your first step to navigating the rough waters of divorce and ensuring you receive what you’re entitled to. Our prompt, professional expertise can empower you to move forward and discover the resolution that’s best for you. Click here or call 251-317-0117 for a legal consultation today.